SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                   FORM 10-K

                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
                    OF THE SECURITIES EXCHANGE ACT OF 1934

   For the fiscal year ended February 28, 1998, Commission File No. 0-1500
                              Evans, Inc.
            (Exact name of registrant as specified in its charter)

                Delaware                               36-1050870
      (State or other jurisdiction of                  (I.R.S.Employer
       incorporation or organization)
       Identification No.)

      36 South State Street, Chicago, Illinois            60603
      (Address of principal executive offices)          (Zip Code)

      Registrant's telephone number, including
      area code                                       (312) 855-2000

      Securities registered pursuant to Section 12(b) of the Act: None

      Securities registered pursuant to Section 12(g) of the Act:

                              Title of Each Class

                         Common Stock, $.20 par value

     Indicate by check mark  whether the  Registrant  (1) has filed all reports
     required to be filed by Section 13 or 15(d) of the  Securities  Exchange  
     Act of 1934  during the  preceding  12 months and (2) has been  subject to 
     such  filing requirements for the past 90 days.

                                  Yes X No

      Indicate by check mark if disclosure of delinquent filers pursuant to Item
      405 of Regulation S-K is not contained herein,  and will not be contained,
      to the best of registrant's  knowledge, in definitive proxy or information
      statements  incorporated  by reference in Part III of this Form 10K or any
      amendment to this Form 10-K. ____

      The  aggregate  market  value of voting  stock of the  Registrant  held by
      nonaffiliates of the Registrant was  approximately  $3,453,000.  For 
      purposes of this  calculation,  all  directors  and  officers  of the  
      Registrant  have been considered to be affiliates.

      As of May 22, 1998, 5,050,245 shares of the Registrant's common stock were
      outstanding.

                     DOCUMENTS INCORPORATED BY REFERENCE:
      Portions of the  Registrant's  Proxy  Statement for its Annual  Meeting of
      Stockholders to be held on July 21, 1998 are  incorporated  into Parts I 
      and III of this Form 10-K.


<PAGE>


                                    PART I

Item 1.           Business

Evans,  Inc.  (together  with  its  subsidiaries,  hereinafter  "Evans"  or  the
"Company"), founded in 1929, was conducted by a predecessor and affiliates until
1963 when the Company was  incorporated  under  Delaware law.  Evans'  executive
offices are located at its  flagship  store at 36 South State  Street,  Chicago,
Illinois 60603 and its telephone number is (312) 855-2000.

Evans is a retailer of fur apparel, cloth coats and suits, dresses,  sportswear,
and related  items and  services.  Fur  apparel is carried in all  Company-owned
stores,  excluding the two Evans Woman  locations,  while women's  ready-to-wear
apparel is carried in the 10 Chicago area Evans and Evans Woman stores.  Company
stores are located in Metropolitan  Chicago,  Austin, Dallas and Washington D.C.
areas.  The Company  operates leased  departments in 54 locations in eight major
department  store chains  located in major  metropolitan  areas  throughout  the
eastern half of the United States and three locations in California.

The Company's  Black  Diamond mink  trademark is registered in the United States
Patent and Trademark Office and in the trademark  offices of 18 other countries.
Black  Diamond  mink is known as a luxurious  fur made from among the finest and
darkest  natural ranch mink. All  Company-owned  stores,  as well as most of the
leased fur salons, market Black Diamond fashions.

Evans  intends to continue its  business  activities  as described  above in the
future.

Buying is  conducted  by buyers and  merchandising  personnel in the open market
under competitive conditions.

Compliance with federal,  state and local regulations  related to the protection
of the  environment  had no  material  effect  upon  the  capital  expenditures,
earnings or  competitive  position of Evans.  Fur apparel sold by Evans does not
include any  so-called  "endangered  species"  and is  primarily  ranch bred for
apparel purposes.

Evans employs regularly on a full or part-time basis approximately 825 employees
whose number  increases  during the Christmas  season to a peak of approximately
900.

Evans' business is seasonal in nature and historically  realizes a major portion
of its annual revenues in the second half and most of its earnings in the fourth
quarter  of  its  fiscal  year.  This  seasonality  results  in an  increase  in
short-term borrowings in the beginning of the third quarter which continues well
into the fourth  quarter of the year due to increased  inventories  and accounts
receivable during such period.


<PAGE>


Item 1.           Business, continued

During  August,  1997,  the Company  acquired the  world-wide  fur  trademark of
Maximillian   (R)  and  entered  into  a  multi-year   license   agreement  with
Bloomingdale's  Stores,  a division  of  Federated  Department  Stores,  Inc. to
operate 17 fur salons under the  Maximillian (R) name. Nine of the locations are
in the eastern part of the United States,  two in the Chicago  metropolitan area
and three  locations  each in Florida and  California.  During fiscal 1998,  the
Company   discontinued  four  seasonal  salons,   two  in  Lazarus  and  one  in
Goldsmith's,  both being divisions of Federated  Department Stores, Inc. and one
in Hudson's, a division of Dayton Hudson Corporation.

The  Company  offers  retail  customers  a program  of fur  services,  including
cleaning, storage, repair, restyling and insurance. The Company provides storage
for approximately 125,000 fur garments annually,  primarily at facilities in its
retail locations. Repair and restyling services are usually performed by Company
personnel.  Information  regarding  the  percentage  composition  of  the  total
revenues of the Company during the period indicated is set forth below:

----------------------------------------------------------------------------
                       Feb. 28,  Mar. 1,     Mar. 2,   Feb. 25,   Feb. 26,
                         1998       1997       1996      1995       1994
----------------------------------------------------------------------------
Retail Fur
Operations
Company-owned
    Stores                15.9%    19.0%      19.0%      22.8%     28.6%
    Leased                46.6      41.1       40.1       30.5      27.7
    Fur Service           13.9      15.6       14.4       13.4      10.6
Wholesale and Catalog
     Sales                                                           0.6
                          -----    -----      -----      -----     ------  

      Subtotal             76.4      75.7        73.5       66.7     67.5

Women's Ready-To-
      Wear and             23.6      24.3        26.5       33.3     32.5
Accessories
----------------------------------------------------------------------------
        Total            100.0%    100.0%      100.0%     100.0%   100.0%
----------------------------------------------------------------------------

Evans  believes  that its  continued  operation of leased  departments,  and its
operation of  additional  leased  departments,  as these  department  stores may
expand,  depends  in  large  part on the  continuance  of  present  satisfactory
relations with these chains.

The business in which Evans is engaged is highly competitive.  In all locations,
Evans  competes with local  furriers,  department  stores and specialty  stores.
Evans  believes its emphasis on design and quality,  broad coverage of price and
size ranges and its advertising,  promotional  programs and competitive  pricing
have resulted in a substantial degree of customer  acceptance of merchandise and
services.

Based on statistics  compiled by the Fur Information  Council of America,  Evans
further   believes  that  it  is  the  nation's   largest   retail  fur  apparel
merchandiser.


<PAGE>


Item 1.           Business, continued

The  following   table  sets  forth   information   concerning   the  number  of
Company-owned  stores and Leased locations  operated during the last five fiscal
years:

--------------------------------------------------------------------------
                       Feb. 28,   Mar. 1,    Mar. 2,  Feb. 25,  Feb. 26,
                         1998       1997      1996      1995      1994
--------------------------------------------------------------------------
Locations Opened
    or Acquired
Company-owned                                                       2
Leased (1)                17         1          1        27         4

Locations Closed:
Company-owned                                   4                   1
Leased (1)                 4         14         1                   5

End of Period:
Company-owned             15         15        15        19        19
Leased (1)                54         41        54        54        27

(1) Includes  seasonal  leased  locations  (generally  operated  October through
January).

------------------------------------------------------------------------------

Financial Information about Industry Segments

The Company's  operations are in a single  industry,  retailing furs and apparel
through the  operation  of stores and leased  departments.  All  operations  are
within  the  United  States and no one  customer  accounts  for more than 10% of
revenues.

<PAGE>


Item 2.           Properties

All  Company  stores and  distribution  centers  and  corporate  facilities  are
operated in leased  premises deemed  suitable for their  activities.  The leased
premises, the sizes thereof and the lease expiration dates are as follows:

--------------------------------------------------------------------------
          Store             Expiration Dates (a)        Square Feet
--------------------------------------------------------------------------
Chicago Area:
(Evans)
36 South State Street
Retail Lease                     12/17/2012                61,775
Office Lease                     12/17/2007                36,020 (b)

Shopping Centers:
(Evans)
River Oaks                       02/28/2007                26,174
North Riverside Mall             02/28/2003                14,326
Yorktown                         05/31/2006                15,718
Evergreen Plaza                  04/30/2001                11,862
Ford City                        02/28/2002                12,181
Orland Square                    02/28/2002                12,000
Harlem Irving Plaza              01/31/1999                7,800

(Evans Woman)
Ford City                        02/28/2002                3,034
Evergreen Plaza                  04/30/2001                2,633

Washington D.C. Area:
(Evans/Rosendorf)
1750 K Street, N.W.              02/28/2005                9,718
Tyson's Corner Center            06/30/2006                2,664
Montgomery Mall                  01/31/2002                3,342

Texas (Koslow's)
Caruth Plaza, Dallas             04/30/2000                14,363
The Arboretum, Austin            07/31/2005                6,000

Distribution Center

Hillside, Illinois               06/30/1999                36,625
New York, New York               08/31/2000                3,520


--------------------------------------------------------------------------
(a)    Includes options to renew.
(b)The Company has served notice of  termination  of the office lease  effective
   August 31, 1998.


<PAGE>


Item 3.           Legal Proceedings

Evans is involved in various claims and lawsuits incidental to its business.  In
the  opinion of  management,  the  ultimate  liability  will not have a material
effect on the consolidated financial statements of the Company.

Item 4.           Submission of Matters to a Vote of Security Holders

There were no matters  submitted to the  shareholders  of the Company for a vote
during the fourth quarter of the fiscal year ended February 28, 1998.


<PAGE>


Item 4A.    Executive Officers of the Registrant

--------------------------------------------------------------------------
                                                                  Served
      Name       Age                     Title                    as
                                                                  Title
                                                                   Since
--------------------------------------------------------------------------
David B. Meltzer  69  Chairman of the Board                        1988

Samuel B. Garber  63  Vice President, General Counsel and
                           Secretary                               1981

William E.        40  Vice President - Finance and Chief
Koziel                Financial                                    1995
                           Officer

Robert K.         44  President and Chief Executive Officer        1997
Meltzer               Executive Vice President - General
                           Merchandising Manager                   1990

John Sarama       46  Vice President of Operations                 1990

Dean Obrecht      53  Vice President of Human Resources            1996
--------------------------------------------------------------------------

No  executive  officer of the  Company  has a family  relationship  to any other
executive officer, except that Robert K. Meltzer is the son of David B.
Meltzer.

Executive Officers

The  executive  officers  are elected  annually by the Board of Directors at the
first meeting  following the annual  meeting of  shareholders.  Vacancies may be
filled and additional officers elected at any meeting of the Board of Directors.
Any  officer  elected  serves  until  the next  annual  meeting  of the Board of
Directors  and until a successor  shall have been elected and qualified or until
his death, resignation or removal by the Board.

These officers have held the positions set forth in the above tabulation for the
last  five  years  or  have   served  the  Company  in  various   executive   or
administrative capacities for at least that length of time.


<PAGE>


                                   PART II


Item 5.   Market for the Registrant's Common Stock and Related
          Shareholder Matters

The Company's common stock is traded in the  Over-the-Counter  Market.  High and
low bid quotations,  as reported on NASDAQ for each quarterly  period during the
past two fiscal years and cash dividends declared, were as follows:


                                                1998
                         -------------------------------------------------
                                  BID PRICE              DIVIDENDS
                         -------------------------
                            HIGH         LOW             DECLARED
                         -------------------------------------------------
      1st Quarter          $1-1/4        $5/8              ----
      2nd Quarter          $3-3/4        $5/8              ----
      3rd Quarter          $3-7/8       $2-1/8             ----
      4th Quarter          $2-1/4       $1-1/2             ----
                         -------------------------------------------------


                                                1997
                         -------------------------------------------------
                                 BID PRICE               DIVIDENDS
                         ------------------------
                            HIGH         LOW             DECLARED
                         -------------------------------------------------
      1st Quarter          $2-3/4      $1-1/8              ----
      2nd Quarter          $2-5/8      $1-3/4              ----
      3rd Quarter          $2-1/2      $1-5/8              ----
      4th Quarter          $1-7/8        $1                ----
                         -------------------------------------------------




As of February 28, 1998, there were  approximately  700 holders of the Company's
common stock.

The Company is restricted,  under the terms of a debt agreement, from paying any
dividends  at  February  28,  1998  (see  Note 3 to the  consolidated  financial
statements).


<PAGE>
Item 6.           Selected Financial Data
 
                         --------------------------------------------------
                           1998        1997      1996       1995      1994
                         ---------------------------------------------------
                        ($ In Thousand's, Except Per Share Amounts)
Financial Position:
Total assets              $48,400    $42,622   $46,011   $48,816   $53,943
Total liabilities          32,099     25,568    24,233    27,272    20,335
Shareholders' equity       16,301     17,054    21,778    21,544    33,608
Current assets             39,707     35,597    32,119    35,152    39,374
Current liabilities        30,291     24,301    22,334    26,078    20,266
                                                           (a)      (a)
Current ratio               1.31      1.46      1.44      1.35      1.94
Long-term debt             1,808     1,224      1,888     1,178

Results from Operations:
Total revenues            $92,255    $82,704   $96,566   $86,817  $96,785
Restructuring                                              3,176
Net (loss) earnings        (835)      (4,724)     234    (12,064)   1,960
                                       (b)                 (c)      (d)
Common Share Data:
Net (loss) earnings per                (e)       (e)       (e)      (e)
share                     $(0.17)    $(0.96)    $0.05    $(2.45)   $0.40
     Basic                $(0.17)    $(0.96)    $0.05    $(2.45)   $0.39
     Diluted
                                       (b)                 (c)      (d)
Weighted average common
and common equivalents
Shares outstanding
     Basic               4,973,819  4,918,301 4,918,301 4,918,301 4,918,301
     Diluted             4,973,819  4,918,301 4,918,301 4,918,301 5,051,255

Book value per share       $3.28      $3.47     $4.43     $4.38    $6.65

 (a)  Certain  long-term  debt  obligations  have  been  reclassified  to
      current  liabilities in conformance with Emerging Issues Task Force
      Abstract  Issue  No.  95-22,   "Balance  Sheet   Classification  of
      Borrowings Outstanding under Revolving Credit Agreements".
 (b)  Net  loss  includes  a $729  or  $0.15  per  share  charge  for the
      write-down  to fair  market  value  of the 36  South  State  Street
      property.
 (c)  Net loss  includes a $1,333 or $0.27 per share tax provision for an
      increase  of its  valuation  allowance  with  respect to future tax
      benefits of the net  operating  loss  reflected in deferred  income
      taxes.
 (d)  Net earnings  include  $1,500 or $0.30 per share for the cumulative
      effect of an income tax accounting  change from adopting  Statement
      of  Financial  Accounting  Standards  109  "Accounting  for  Income
 (e)  Taxes".
      Net  (loss)  earnings  per  share  has  been  restated  based  upon
      Statement of Financial  Accounting  Standards  128,  "Earnings  Per
      Share").

ITEM 7.     Management's  Discussion and Analysis of Financial  Condition and
            Results of Operations

Results of Operations

Total revenues during fiscal 1998 increased  $9,551,000 (11.5%) in comparison to
fiscal 1997 as the result of increases of $7,938,000  (16.0%) in fur merchandise
sales and $1,643,000  (8.2%) in women's  ready-to-wear  sales offset by a slight
decrease in service  sales of $29,000  (0.2%).  The increase in fur  merchandise
sales was due primarily to sales of $14,073,000 at locations acquired during the
second  quarter of fiscal 1998 as well as $855,000  in sales  associated  with a
store-closing  event at Macy's in Texas during the first  quarter.  The increase
was partially  offset by decreases of  $3,182,000  (6.9%) in sales at comparable
locations, $3,378,000 in sales associated with a store closing event at Marshall
Fields in Texas  during the latter  half of fiscal  1997 and  $448,000  in sales
related to a store closed during the second quarter of fiscal 1997. The decrease
in fur merchandise sales at comparable locations was largely due to a $3,025,000
decrease during the months of January and February,  which the Company  believes
resulted  from the impact of the  warmest  January and  February  since the U.S.
weather bureau began compiling statistics, coupled with a decrease of $1,021,000
during March,  1997 which resulted from a lack of availability of finished goods
at certain affordable retail price levels. The Company believes that the women's
ready-to-wear comparable store sales increase of $1,643,000 (8.2%) was primarily
due to the refocusing of its efforts on providing product in line with tastes of
its target consumers.  Service revenues  decreased  slightly for the fiscal year
due to an increase of $809,000  associated  with locations  acquired  during the
second  quarter of fiscal 1998 offset by a decrease of $516,000  (4.1%) in sales
at comparable  locations and prior year sales  including  $322,000  related to a
store closed during fiscal 1997.

Total revenues during fiscal 1997 decreased $13,862,000 (14.4%) in comparison to
fiscal 1996 as the result of decreases of $7,314,000  (12.8%) in fur merchandise
sales, $5,547,000 (21.6%) in women's ready-to-wear sales, and $1,001,000 (7.2% )
in service revenues.  The decrease in fur merchandise sales was due primarily to
a decrease of $6,537,000 (12.8%) in sales at comparable locations and a decrease
of $4,843,000 in sales associated with four  Company-owned  locations,  one full
time  leased  location,  and  thirteen  seasonal  leased  locations  in  several
department  store chains  closed  during and  subsequent  to fiscal 1996.  These
decreases were  partially  offset by sales of $3,378,000  associated  with store
closing  events in the Marshall  Fields stores in Texas and an increase in sales
of $688,000  from two new full time leased  locations  opened  subsequent to the
second quarter of fiscal 1996. The Company  believes that fur merchandise  sales
at comparable  locations were adversely impacted by the significant  increase in
fur prices,  primarily  mink, and the lack of  availability of finished goods at
certain affordable retail price levels, as well as the record high consumer debt
levels.  The  decrease in women's  ready-to-wear  sales was due  primarily  to a
decrease of $4,184,000  (17.2%) in sales at comparable  locations and a decrease
of  $1,363,000  in sales  associated  with the  closing of 
<PAGE>

ITEM 7.  Management's Discussion and Analysis of Financial Condition and
            Results of Operations

Results of Operations, continued

two  Company-owned  locations  during  fiscal 1996.  The Company  believes  that
women's  ready-to-wear sales at comparable  locations were adversely impacted by
competition  from  department  and  discount  stores.  The  decrease  in service
revenues was primarily the result of a decrease of $791,000 in sales  associated
with four  Company-owned  locations  closed  during  fiscal  1996 and one leased
location closed during fiscal 1997 and a decrease of $210,000 (1.6%) in sales at
comparable locations.

Cost of goods and services sold,  buying and occupancy costs were 63.9% of total
revenues  in fiscal 1998 as compared to 65.3% in fiscal 1997 and 64.0% in fiscal
1996.  During fiscal 1998,  cost of goods sold as a percentage of total revenues
decreased  over the prior year (49.5%  versus 50.5%) and returned to fiscal 1996
levels.  The  increase  in the prior  year was due to the  Company's  attempt to
stimulate  demand at certain  lower retail price  points,  primarily in the mink
classifications.  Occupancy costs as a percentage of total revenues decreased in
fiscal 1998 as compared to the prior year (12.2% vs. 12.4%) due primarily to the
impact of fixed rental costs as measured  against the overall increase in sales.
Buying costs as percentage of total revenues  increased  slightly over the prior
year.  During  fiscal 1997,  occupancy  costs as  percentage  of total  revenues
increased as compared to the prior year (12.4%  versus  12.1%) due  primarily to
the impact of fixed  rental  costs as measured  against the overall  decrease in
sales.  Buying costs in fiscal 1997 as a percentage  of total  revenues  were up
slightly over the prior year.

During fiscal 1998,  selling and general expenses increased by $1,621,000 (5.3%)
as compared to the prior year.  Payroll and related  fringe  benefits  increased
$948,000 or 5.6% due to the additional payroll and benefits  associated with the
acquisition of 17 salons  operating  under the Maximilian  name. Fees related to
using  bankcards  increased by $286,000 or 66.1%.  This increase  relates to the
increase in business at the acquired salons. Due to the acquisition, the sale of
the building and services related to systems and data  processing,  professional
services  increased by  $157,000.  Due to a decrease in the balance of the Evans
credit card portfolio, finance income decreased by $111,000. During fiscal 1997,
selling and general expenses  decreased by $1,892,000  (5.8%) as compared to the
prior year.  Payroll and related fringe benefits  decreased $723,000 or 4.1% due
to a sales commission related decrease of $231,000 at comparable locations and a
$662,0900  decreased at locations  closed  during and  subsequent to fiscal 1996
partially  offset by  $170,000 of payroll and  related  fringe  benefits  with a
Marshall  Field's store closing event in three stores in Texas.  Data processing
costs  decreased  by  $171,000  or 20% as  compared  to the  prior  year  due to
continued  savings  associated  with the  migration  to a lower based  operating
platform for the Company's systems. Advertising expense decreased by $984,000 or
11.3% due  largely to a decrease  of $600,000  at  locations  closed  during and
subsequent to fiscal 1996.
<PAGE>

ITEM 7.     Management's  Discussion and Analysis of Financial  Condition and
            Results of Operations, continued

Results of Operations, continued

Interest  expense for fiscal 1998 and 1997 increased  $66,000 (4.6%) and $63,000
(4.5%) respectively as compared to fiscal 1997 and fiscal 1996 due in large part
to higher  average  short-term  borrowings  partially  offset  by lower  average
interest rates as compared to the prior year.

The Company  recorded net other income of $63,000 for fiscal 1998 and $5,000 for
fiscal 1996 compared to net other  expense of $673,000 for fiscal 1997.  The net
other  expense for fiscal  1997 was the result of a charge of $729,000  recorded
for the  write-down to fair market value of the property  located at 36 S. State
Street  partially  offset by a gain from the sale of the Fort Worth real  estate
during  the  fourth  quarter.  The net  other  income  for  fiscal  1998 was due
primarily to a $58,000  reversal of the prior year write-down on the property at
36 S. State Street resulting from the  consummation of the  transaction.  Fiscal
1996 net  other  income  was  primarily  interest  income  from  temporary  cash
investments.

The  effective  tax rate in  fiscal  1998 was  10.6% as  compared  to 19.6% in
fiscal 1997 and 1996, respectively.

During fiscal 1998 and 1997, the Company increased its valuation  allowance with
respect  to the  future  tax  benefits  and  the  uncertainty  of their ultimate
realization.  The Company  will  continue to evaluate  the  valuation  allowance
recorded  with respect to the future tax benefits  reflected in deferred  income
taxes.  During fiscal 1996, the Company  utilized a portion of its net operating
loss carry forward to fully offset the tax provision.

Fiscal  1998  resulted  in a net loss of  $835,000  as compared to a net loss of
$4,724,000 in fiscal 1996 and a net earnings of $234,000 in fiscal 1996. The net
loss for fiscal  1998 was due  primarily  to the  decline in total fur sales and
related gross margins from continuing  operations  during the last two months of
the fiscal year. The Company  believes these results  reflect the adverse impact
of record  breaking  warm  temperatures  in the months of January  and  February
believed  to be  caused  by the  effects  of the  strongest  El Nino in the last
fifteen years.

The net loss for fiscal 1997 was due primarily to the decline in total fur sales
and  related  gross  margins  which the Company  believes  was the result of the
significant  increase in fur prices,  primarily  mink,  coupled with the lack of
availability of finished goods at certain  affordable  retail price levels.  The
Company believes that the significant  increase in demand  worldwide  (primarily
markets in Korea,  Russia and China) for mink during fiscal 1997 combined with a
static supply of fur precipitated  both the highest price increase ever recorded
at the wholesale level and the lack of product availability. In addition, record
high consumer debt levels had an adverse impact on consumer
<PAGE>
ITEM 7. Management's Discussion and Analysis of Financial Condition and
            Results of Operations, continued

Results of Operations, continued

purchasing power. The Company also recorded a $729,000 write-down to fair market
value for its 36 South State Street property.

The net  earnings  for fiscal  1996 were  largely  due to the  increase in total
revenues and improved gross margins as well as the cost  reductions  achieved as
part  of the  Company's  restructuring  initiated  at the  end of  fiscal  1995,
partially offset by the increase in occupancy costs and interest expense.

All  indications  are that the price of fur  merchandise,  primarily  mink, will
increase  moderately  in fiscal  1999 due to an  increase in the demand for fur,
primarily in markets outside of North America. Also, preliminary indications are
that  finished  goods will be available in  sufficient  quantities  at all price
levels to meet the Company's needs for fiscal 1999. The Company is encouraged by
the broad coverage of fur fashions by the national fashion publications, as well
as  the  significant   increase  of  prominent  designers  using  fur  in  their
collections.

Liquidity and Capital Resources
Cash and cash  equivalents  at February 28, 1998 were  $650,000,  an increase of
$497,000 as compared to March 1, 1998.  The increase  was due  primarily to cash
provided by financing  activities of $5,016,000 partially offset by cash used in
operating and investing activities of $3,736,000 and $783,000, respectively.

The  cash  used in  operating  activities  was  primarily  due to  increases  of
merchandise  inventories  of  $5,361,000  partially  offset  by an  increase  in
accounts payable of $1,847,000.  The increase in merchandise inventories was due
to the  incremental  inventory  needed to provide  merchandise  for the acquired
locations  coupled  with  inventory  remaining at the end of the year due to the
decline in sales  during the months of January and  February.  Accounts  payable
increased as a result of the  purchases of  additional  inventory in the current
year.

The cash used in investing  activities  was due to the payment of $5,387,000 for
the acquisition of the inventory and operating  assets as well as the world-wide
fur  trademark  of  Maximilian(R)  to operate fur salons  within  Bloomingdale's
Stores.  Offsetting the acquisition  was the proceeds  received from the sale of
the Company's State Street building of $4,871,000.


<PAGE>


ITEM 7.     Management's  Discussion and Analysis of Financial  Condition and
            Results of Operations, continued

Liquidity and Capital Resources, continued

The cash provided by financing  activities was for net proceeds from  short-term
borrowings  of  $3,713,000,  amounts  received  related  to the  acquisition  of
Maximilian(R)  at  Bloomingdale's  of  $3,815,000  and a  net  increase  of  the
long-term credit facility of $1,010,000. These increases were offset by payments
on long-term borrowings of $3,522,000.

On June 16,  1997,  the  Company  finalized  an  agreement  with a new lender to
refinance the existing senior secured debt and provide for the Company's working
capital needs. The new agreement  provides for a three year  $27,000,000  credit
facility which includes a term loan of  $2,000,000.  The agreement  provides for
interest at 0.25% over the base rate (prime) for the revolving facility and term
loan. The agreement provides for monthly principal payments of $23,810 beginning
October 1, 1997 with the remaining unamortized balance due June 15, 2000.

On August 7, 1997, the Company  entered into an agreement with its lender for an
amendment to its loan and security agreement. The amendment, among other things,
increased the credit facility to $35,000,000 from $27,000,000. Additionally, the
revolving loan commitment,  which provides for direct borrowing was increased to
$33,000,000 from $25,000,000.  The financial  covenants were adjusted to reflect
the acquisition of the assets of Triomphe Fourrures incorporated, as well as the
Company's current financial operating condition.

On  December  17,  1997,  the  Company  closed on the sale and lease back of its
flagship store and corporate office headquarter  building located at 36 S. State
Street in Chicago,  Illinois.  The net proceeds of $4,100,000 generated from the
sale  were  used  first to pay down the  unamortized  senior  secured  long-term
payable obligation and then the secured revolving loan obligation.

On May 28,  1998,  the  Company  amended  its  agreements  with its  lenders  to
establish  and modify  certain  financial  covenants  to reflect  the  Company's
current operating results and financial needs.

On June 3, 1998, the Company  amended its agreement and promissory  note related
to  the   acquisition  of  the  assets  in  connection  with  the  operation  of
Maximilian(R) Fur Salons.  The amendments provide for a revised payment plan for
the quarterly installments due May 4, 1998 and August 4, 1998. The payments will
be made as follows:  $100,000 due June 30, 1998, $84,850 due monthly from August
31, 1998 through  November 30, 1998 with the final  installment due December 15,
1998.  These payments will be paid with interest at a rate of 10% per annum. The
remaining debt schedule will remain intact.


<PAGE>


ITEM 7.     Management's  Discussion and Analysis of Financial  Condition and
            Results of Operations, continued

Liquidity and Capital Resources, continued

The Company's anticipated capital expenditures for fiscal 1998 are approximately
$700,000 to be used primarily for improvements to existing locations.

The credit  facility  which  expires  June 15,  2000 is  considered  adequate to
finance seasonal inventory  requirements as well as capital expenditures through
fiscal 1998.

Other
In response to the Year 2000 issue, the Company has begun to identify,  evaluate
and implement changes to its existing computerized business systems. The Company
is  addressing  the issue  through a combination  of  modifications  to existing
programs and  conversions  to Year 2000  compliant  software.  In addition,  the
Company is in the process of  communicating  with its vendors and other  service
providers to determine  whether they are actively involved in projects to ensure
that their  products  and  business  systems  will be Year 2000  compliant.  The
Company does not anticipate any material problems associated with using computer
programs or retrieving  computerized  information with respect to Year 2000. The
Company is still  quantifying  the  impact of total  costs  associated  with the
required  modifications  and  conversions.  These  costs are being  expensed  as
incurred.

Statement of Financial Accounting Standards No. 130, "Reporting  Comprehensive
Income" ("SFAS No. 130"),  was issued in June 1997.  SFAS No. 130, effective for
financial  statements for periods beginning after  December 15, 1997 requires 
the reporting of comprehensive  income in a financial  statement that is 
presented with  the  same  prominence  as  other  financial  statements.  The  
Company's financial  statements  are  prepared in  accordance  with SFAS No. 130
and the Company  believes  that net (loss)  earnings in the  statement  of  
operations reflects the comprehensive income of the Company.

Statement of Financial Accounting Standards No. 131, "Disclosures about Segments
of an Enterprise and Related  Information"  ("SFAS No. 131"), was issued in June
1997. This statement,  effective for financial  statements for periods beginning
after  December 15, 1997,  requires  that a public  business  enterprise  report
financial and descriptive  information about its reportable  operating segments.
The Company is currently evaluating the effect of adopting SFAS No. 131.



<PAGE>


ITEM 7.     Management's  Discussion and Analysis of Financial  Condition and
            Results of Operations, continued

Other, continued

Statement of Financial  Accounting  Standards No. 132,  "Employers'  Disclosures
about Pension and Other Postretirement Benefits" ("SFAS No. 132"), effective for
fiscal years  beginning  after  December 15, 1997,  standardizes  the disclosure
requirements  for  pensions  and  other  post  retirement   benefits,   requires
additional  information on changes in the benefit  obligation and fair values of
plan assets and eliminates  certain  disclosures that are no longer useful.  The
Company does not anticipate any significant changes in disclosure being required
by SFAS No. 132.

Safe Harbor Provision of the Private Securities Litigation Reform Act of 1995

The  statements  contained  in  Item 1  (Description  of  Business)  and  Item 7
(Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations)   that  are  not  historical   facts  may  include   forward-looking
statements.  The Company cautions readers that these forward-looking  statements
are  subject to a variety of risks and  uncertainties  that could  cause  Evans'
actual  results to differ  materially  from those  expressed in  forward-looking
statements.  These risks and uncertainties include, without limitation,  general
economic and business  conditions  affecting  the  customers in existing and new
geographical markets,  competition from national,  regional and local retailers,
the availability of sufficient  capital,  and the ability to obtain and identify
the right  product mix and to maintain  sufficient  inventory  to meet  customer
demand.


<PAGE>


Item 8.           Financial Statement and Supplementary Data


                      REPORT OF INDEPENDENT ACCOUNTANTS



To the Shareholders and
  Board of Directors
Evans, Inc.


We have audited the accompanying  consolidated balance sheets of Evans, Inc. and
Subsidiaries  as of  February  28,  1998 and  March  1,  1997,  and the  related
consolidated statements of operations,  shareholders' equity, and cash flows for
the years  ended  February  28,  1998,  March 1, 1997 and March 2,  1996.  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the consolidated  financial position of Evans, Inc. and
Subsidiaries at February 28, 1998, March 1, 1997 and the consolidated results of
their  operations  and their cash flows for the years ended  February  28, 1998,
March 1, 1997 and March 2, 1996 in conformity with generally accepted accounting
principles.



                                    COOPERS & LYBRAND L.L.P.





June 4, 1998
Chicago, Illinois


<PAGE>
<PAGE>
                          EVANS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                       February 28, 1998 and March 1, 1997
                                ($ In Thousands)
<TABLE>
<CAPTION>

                                                   1998     1997                                                      1998      1997
                                                -------  --------                                                  -------   -------
<S>                                             <C>      <C>          <C>                                          <C>       <C>    
ASSETS                                                                LIABILITIES AND SHAREHOLDERS' EQUITY    
Current assets:                                                       Current liabilities:
  Cash and cash equivalents                       $650      $153        Notes payable                              $13,021   $9,308
  Accounts receivable, less allowance for                               Current portion of long-term debt           1,411       692
    doubtful accounts of $535 and $755          12,639    12,665        Accounts payable                           11,165     9,318
  Merchandise inventories                       25,495    17,130        Accrued liabilities:
  Prepaid expenses and other current assets        923       899          Payroll                                     324       455
  Assets held for sale                               -     4,750          Taxes, other than on income                 967     1,267
                                                -------  --------
                                                                          Rent                                      1,563     1,395
Total current assets                            39,707    35,597          Vacations                                   772       789
                                                -------  --------
                                                                          Other                                     1,068     1,077
                                                                                                                   -------   -------
Property and equipment:
                                                                      Total current liabilities                    30,291    24,301
                                                                                                                   -------   -------
  Furniture and equipment                        5,590     5,524
  Leasehold improvements                         6,052     5,792      Long-term debt                                1,808     1,224
                                                -------  --------                                                  -------   -------

                                                11,642    11,316      Other liabilities                                 -        43
                                                                                                                   -------   -------

                                                                      Commitments and contingent liabilities            -         -
                                                                                                                   -------   -------

                                                                      Shareholders' equity:
  Accumulated depreciation and amortization     (8,203)   (7,398)       Preferred stock, $1.00 par value, 3,000,000 shares
                                                -------  --------
                                                                          authorized, none issued
                                                 3,439     3,918        Common stock, $.20 par value, 8,000,000 shares
                                                -------  --------
                                                                          authorized, 6,333,435 shares issued       1,267     1,267
                                                                        Capital in excess of par value             15,495    15,660
                                                                        Retained earnings                           3,890     4,725
                                                                        Treasury stock, 1,339,190 and 1,415,134 shares
Intangible and other assets                                               at cost                                  (4,351)   (4,598)
                                                                                                                   -------   -------
  (net of accumulated amortization of $1,341 and
    and $1,090)                                  5,254     3,107      Total shareholders' equity                   16,301    17,054
                                                -------  --------                                                  -------   -------

                                                $48,400  $42,622                                                   $48,400   $42,622
                                                =======  ========                                                  =======   =======


<FN>
The  accompanying  notes  are an  integral  part  of the
consolidated financial statements.
</FN>
</TABLE>
<PAGE>

                       EVANS, INC. AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF OPERATIONS
  for the years ended February 28, 1998, March 1, 1997 and March 2, 1996
                ($ In Thousands Except Per Share Amounts)



                                    1998            1997           1996
                                 -----------     -----------    -----------

Net sales                           $79,369         $69,789        $82,650
Service revenues                     12,886          12,915         13,916
                                 -----------     -----------    -----------

  Total revenues                     92,255          82,704         96,566
                                 -----------     -----------    -----------

Cost of goods and services sold,
  occupancy and buying costs         58,906          53,988         61,787
Selling and general expenses         32,239          30,617         32,510
Provision for doubtful accounts         416             621            600
Interest expense                      1,512           1,446          1,383
Other (income) expense, net             (63)            673             (5)
                                 -----------     -----------    -----------

                                     93,010          87,345         96,275
                                 -----------     -----------    -----------

   (Loss) earnings before provision
     for income taxes                  (755)         (4,641)           291

Provision for income taxes               80              83             57
                                 -----------     -----------    -----------

    Net (loss) earnings               ($835)        ($4,724)          $234
                                 ===========     ===========    ===========

Net (loss) earnings per share
     Basic                           ($0.17)         ($0.96)         $0.05
                                 ===========     ===========    ===========
     Diluted                         ($0.17)         ($0.96)         $0.05
                                 ===========     ===========    ===========

Weighted average common and common
  equivalent shares
     Basic                        4,973,819       4,918,301      4,918,301
                                 ===========     ===========    ===========
     Diluted                      4,973,819       4,918,301      4,918,301
                                 ===========     ===========    ===========



 The accompanying notes are an integral part of the consolidated 
 financial statements.
<PAGE>
<TABLE>

                                EVANS, INC. AND SUBSIDIARIES
                             CONSOLIDATED STATEMENTS OF CHANGES
                                   IN SHAREHOLDERS' EQUITY

                           for the years ended February 28, 1998,
                               March 1, 1997 and March 2, 1996

                             ($ In Thousands except share data)


<CAPTION>
                                              Capital in
                             Common Stock     Excess of   Retained   Treasury Stock
                            Shares   Amount   Par Value   Earnings   Shares   Amount   Total
                           ------------------ ----------  --------- ------------------ -------
  <S>                      <C>       <C>      <C>         <C>       <C>        <C>     <C>

  Balance, February 25,
    1995                   6,333,435 $ 1,267   $ 15,660    $ 9,215  1,415,134$ (4,598) $ 21,544

  Net earnings                                                 234                        234
                           ------------------ ----------  --------- ------------------ -------

  Balance, March 2,
    1996                   6,333,435   1,267     15,660      9,449  1,415,134  (4,598) 21,778

  Net loss                                                  (4,724)                    (4,724)
                           ------------------ ----------  --------- ------------------ -------

  Balance, March 1,
    1997                   6,333,435   1,267     15,660      4,725  1,415,134  (4,598) 17,054

  Stock Options Exercised                            (7)              (4,000)      13       6
  Stock Compensation to
       Directors                                   (158)             (71,944)     234      76
  Net loss                                                    (835)                      (835)
                           ------------------ ----------  --------- ------------------ -------

  Balance, February 28,
    1998                   6,333,435 $ 1,267   $ 15,495    $ 3,890  1,339,190$ (4,351) $ 16,301
                           ================== ==========  ========= ================== =======






<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
                            EVANS, INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                  for the years ended  February 28,  1998,  March 1,
                        1997 and March 2, 1996 ($ In Thousands)
<CAPTION>

                                                     1998         1997        1996
                                                   ---------    ---------   ----------
<S>                                                <C>          <C>         <C>

Cash Flows from Operating Activities:
Net (loss) earnings                                    (835)      (4,724)         234

Adjustments to reconcile  net (loss)  
earnings to net cash provided by (used in)
operating activities:
  Depreciation and amortization                       1,073        1,426        1,435
  Net gain from the disposition of
    property and equipment                              (52)         (55)          (3)
  Net loss (gain) from write-down of property
    and equipment                                                    729         (154)
  Provision for doubtful accounts                       416          621          600
  Non-cash compensation expense                          70

  Change in assets and liabilities net of effects 
  of acquisition:
    Accounts receivable                                (390)       2,698          521
    Merchandise inventories                          (5,361)      (2,369)       1,640
    Prepaid expenses and other current assets           (24)         255         (642)
    Long-lived assets                                  (161)         141         (673)
    Accounts payable                                  1,847        2,707       (2,300)
    Accrued liabilities                                (289)        (478)      (1,469)
    Other liabilities                                   (30)          32           (5)
                                                   ---------    ---------   ----------

Net cash (used in) provided by operating activities  (3,736)         983         (816)

Cash Flows from Investing Activities:
Acquisition of business                              (5,387)
Proceeds from the sale of property and equipment      4,871          360            3
Additions to property and equipment                    (267)        (484)        (836)
                                                   ---------    ---------   ----------

Net cash used in investing activities                  (783)        (124)        (833)

Cash Flows from Financing Activities:
Proceeds from short-term borrowing                    3,713           89
Principal payments on short-term borrowing                                       (746)
Notes payable related to acquisition                  3,815
Payment of notes payable related to acquisition      (1,048)
Additional long-term debt                             1,010                     2,000
Principal payments on long-term debt                 (2,474)      (1,015)        (519)
                                                   ---------    ---------   ----------

Net cash provided by (used in) financing activities   5,016         (926)         735
                                                   ---------    ---------   ----------

Net increase (decrease) in cash and cash equivalents    497          (67)        (914)
Cash and cash equivalents at beginning of period        153          220        1,134
                                                   ---------    ---------   ----------

Cash and cash equivalents at end of period              650          153          220
                                                   =========    =========   ==========

Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
  Interest                                            1,429        1,454        1,393
  Income taxes                                           34           98           57

<FN>
The accompanying  notes are an integral part of the consolidated
financial statements.
</FN>
</TABLE>
<PAGE>


                         EVANS, INC. AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.    Significant Accounting Policies

      The following is a summary of the significant accounting policies followed
in the preparation of the financial statements:

      A.    Principles of Consolidation

            The consolidated financial statements include the accounts of
            Evans, Inc. and it subsidiaries, all of which are wholly owned.

      B.    Recognition of Revenues

            All revenues,  including installment and revolving credit sales, are
            included in the financial statements on the accrual method.

      C.    Cash and Cash Equivalents

            For  purposes  of the  consolidated  statement  of cash  flows,  the
            Company  considers all highly liquid debt  instruments  purchased  
            with an original maturity of three months or less to be cash 
            equivalents.

      D.    Merchandise Inventories

            Merchandise  inventories  are  stated at the lower of cost or market
            with cost  determined  on the basis of  specific  identification  
            for furs (approximately  92% and 88% of total  inventory  in fiscal
            1998 and 1997, respectively) and on the retail method on a first-in,
            first-out basis for other  inventories.  The Company includes in 
            inventory certain  purchasing and handling costs. The Company 
            believes this method provides for matching the full cost of  
            obtaining  merchandise  and  preparing  it for sale with related 
            revenues.

      E.    Property and Equipment

            Property and  equipment  are stated at cost.  Depreciation  is
            provided on the  straight-line  method in the  financial  statements
            over the estimated useful lives of the assets.  The estimated useful
            lives are 3-10 years for furniture,  fixtures,  other  equipment and
            software.  Leasehold  improvements are amortized  generally over the
            shorter of the life of the related  asset or the  remaining  term of
            the  lease.  Accelerated  methods of  depreciation  are used for tax
            purposes.




<PAGE>


                         EVANS, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

1.    Significant Accounting Policies, continued

      E.    Property and Equipment, continued

            Upon  disposal  of  property  and  equipment,  the cost of the asset
            retired and the  related  accumulated  depreciation  or  
            amortization  are eliminated  from the accounts and the resulting
            gain or loss is reflected in the consolidated statement of 
            operations.

            Expenditures   for  maintenance  and  repairs  are  charged  against
            earnings and expenditures for betterments and major renewals are 
            capitalized.

            The Company  evaluates the  recoverability  of asset carrying values
            using  estimates of future cash flows over  remaining  asset  lives.
            When impairment is dictated,  any impairment  loss is measured by 
            the excess of carrying values over full values.

      F.    Intangibles and Other Assets

            Intangibles,  contracts and other deferred  charges are stated
            at cost less  amortization  provided on a  straight-line  basis over
            periods ranging from 4 to 40 years.  Approximately 95% of the assets
            have  amortization  periods of 20 years (for  goodwill) and 40 years
            (for other intangibles).  The Company assesses the recoverability of
            intangible  assets by determining  whether the  amortization  of the
            asset  balance  over  its  remaining  life can  berecovered  through
            undiscounted  future operating cash flows. The amount of impairment,
            if any,  would be  measured  based on  projected  discounted  future
            operating cash flows using a discount rate  reflecting the Company's
            average cost of funds.

      G.    Advertising and Preopening Costs

            Advertising  costs and costs incurred in connection with the opening
            of new locations are expensed as incurred. Total advertising expense
            for the fiscal  years ended  February  28,  1998,  March 1, 1997 and
            March 2, 1996 was $7,647,000, $7,737,000 and
            $8,721,000 respectively.


<PAGE>


                         EVANS, INC. AND SUBSIDIARIES

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS, Continued

1.     Significant Accounting Policies, continued

      H.    Earnings per Share

            The Company has adopted Financial  Accounting Standards Board issued
            Statement No. 128, "Earnings per Share," effective February 28, 1998
            which  specifies  the  computation,   presentation,  and  disclosure
            requirements  for  earnings  per  share.  The  computation  of basic
            earnings per common share is computed based on net income  available
            to common shareholders divided by the weighted average common shares
            outstanding. The computation of diluted earnings per common share is
            based on net income  divided by weighted  average  common shares and
            potentially  dilutive securities such as stock options. All earnings
            per share  amounts for all periods  have been  presented,  and where
            appropriate, restated to conform to the Statement 128 standards.

      I.    Fiscal Year

            The  Company's  fiscal year ends on the Saturday  nearest the end of
            February.  Fiscal 1998 and 1997 ended February 28, 1998 and March 1,
            1997, respectively, and were comprised of 52 weeks each. Fiscal 1996
            ended March 2, 1996 and was comprised of 53 weeks.

      J.    Industry Segment Information

            The Company's  operations are in a single industry,  retailing furs,
            apparel and related items and services through the operation of 
            stores and leased departments. All operations are within the United 
            States and no one customer accounts for more than 10% of revenues.

            Inherent in the accompanying  financial statements are certain risks
            and  uncertainties.  These risks and  uncertainties  include,  but 
            are not limited to the impact of competition and available sources 
            of supply.

      K.    Income Taxes

            Taxes on  income  are  accounted  for under  the  liability  method.
            Deferred  income taxes are  recognized for the tax  consequences  in
            future  years of  differences  between  the tax basis of assets  and
            liabilities and their financial  reporting  amounts at each year-end
            based on enacted tax laws and statutory tax rates  applicable to the
            period in which  the  differences  are  expected  to affect  taxable
            earnings.  Valuation  allowances are  established  when necessary to
            reduce deferred tax assets due to the uncertainty of their


<PAGE>


                         EVANS, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

1.     Significant Accounting Policies, continued

      K.    Income Taxes, continued

            ultimate realization.  Income tax expense is the tax payable for
            the period and the change during the period in deferred tax
            assets and liabilities.

      L.    Use of Estimates

            The preparation of financial statements in conformity with generally
            accepted  accounting  principles requires management to make 
            estimates and assumptions  that affect the reported amounts of 
            assets and liabilities at the date of the financial  statements and
            the reported amounts of revenues and expenses during the reporting 
            period. Actual results could differ from those estimates.

2.    Cash and Cash Equivalents Concentration

      A  significant  portion of the  Company's  cash and cash  equivalents  are
      maintained  with one  financial  institution.  The cash  accounts  of this
      financial  institution are insured up to the limits of federal  government
      requirements.

3.    Debt Obligations

      At February 28, 1998 and March 1, 1997,  long-term  debt  consisted of the
      following:
                                                  1998           1997
                                                  ----           ----
       Note  payable,  $1,573,000  amount  due
       August,  1997,  $524,000  due in November
       1997 and  February  1998,  $100,000  due
       June 1998,  subsequent monthly  
       installments of $84,850 August,  1998 
       through December 1998 (10% per annum), 
       subsequent quarterly installments of 
       $262,000 due November, 1998 through 
       November 1999; $932,000 due December 1999
      (Note 11)                                 $2,766,000  

       Note payable,  floating prime rate plus 
       1% (Maximum rate of 11%), $91,000 
       principal amount due July,1995;  
       subsequent  principal due in semi-annual
       amounts of $181,000 beginning January, 
       1996, through January, 1999; $91,000 
       due July, 1999.                             453,000     $816,000


<PAGE>


                         EVANS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

3.    Debt Obligations, continued

       Note payable, floating prime rate
       plus 2%.  Principal due in
       Monthly installments of $27,500
       beginning July, 1995 through
       April, 1998; 715,000 due May, 1998.                      1,100,000
                                                 ------------   ---------
                                                   3,219,000    1,916,000
       Less amounts due in one year                1,411,000      692,000
                                                 -----------   ----------
                                                  $1,808,000   $1,224,000

      At February  28,  1998,  the Company  had an  available  line of credit of
      $21,919,000  ($17,086,000  of which  was used in  support  of  letters  of
      credit, bankers acceptances, direct borrowings and other reserves).

      On June 16, 1997, the Company  finalized an agreement with a new lender to
      refinance the existing  senior  secured debt and provide for the Company's
      working capital needs. The agreement provides for a three year $27,000,000
      credit  facility which  includes a term loan of $2,000,000.  The agreement
      further  provides  for  interest  at 0.25% over the base rate  (prime) for
      direct  borrowings  under the revolving  facility and the tem loan.  Prime
      rate was 8.50% at February 28, 1998.  The  agreement  contains  provisions
      which,  among other things,  require the maintenance of certain  financial
      covenants,  the most  restrictive of which is the maintenance of a certain
      level of earnings before  interest,  taxes,  depreciation and amortization
      (EBITDA).  The  agreement  prohibits  the  payment of cash  dividends  and
      requires a commitment fee of  three-tenths of one percent per annum on the
      unused portion of the revolving  loan.  Also, all assets,  rights interest
      and  properties of the Company are pledged as collateral for the revolving
      and term loan obligations.

      On August 7, 1997,  the Company  entered into an agreement with its lender
      for an amendment to its loan and security agreement. The amendment,  among
      other  things,   increased  the  credit   facility  to  $35,000,000   from
      $27,000,000.  Additionally,  the revolving loan commitment, which provides
      for direct  borrowing was increased to $33,000,000 from  $25,000,000.  The
      financial covenants were adjusted to reflect the acquisition of the assets
      of  Triomphe  Fourrures  incorporated,  as well as the  Company's  current
      financial operating condition.


<PAGE>


                         EVANS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

3.    Debt Obligations, continued

      On December 17, 1997,  the Company  consummated on the sale and lease back
      of its flagship store and corporate office headquarter building located at
      36 S. State Street in Chicago,  Illinois.  The net proceeds of  $4,100,000
      generated  from the sale  were used  first to pay down on the  unamortized
      senior secured long-term payable obligation and then the secured revolving
      loan obligation.

      On May 28, 1998, the Company  amended its  agreements  with its lenders to
      establish and modify certain financial  covenants to reflect the Company's
      current operating results and financial needs.

      Scheduled  payments  on long term debt for the fiscal  years 1999 and 2000
      are $1,411,000 and $1,808,000 respectively.

      The weighted  average  interest rate on short-term  borrowings  was 9.26%,
      10.41% and 11.24% for fiscal years 1998, 1997 and 1996, respectively.

4.    Common Stock

      During fiscal 1996, 225,000 options were issued to officers of the Company
      at a price of $1.50 per share  being 100% of the market  price at the date
      of issue.  During  fiscal  1996,  the Company  granted key  employees  and
      members of the Board of Directors options for 166,000 and 10,000 shares at
      prices of $1.50 and $1.375, respectively,  the prices being 100% of market
      value at the dates of grant.

      During fiscal 1997, the Company granted additional key employees and a new
      member of the Board of Directors  options for 36,500 and 10,000  shares at
      prices of $2.25 and $2.00,  respectively,  the prices being 100% of market
      value at the dates of grant. Also, options granted on 7,000 shares expired
      during fiscal 1997.

      During fiscal 1998, the Company granted  additional key employees  options
      for 2,500 at a price of $2.00,  the prices  being 100% of market  value at
      the date of grant.  Also, 4,000 options were exercised and options granted
      on 13,500 shares expired during fiscal 1998.

      As of February 28, 1998,  425,500 options were exercisable and 74,500 were
      available for grant under the Company's stock option plan.


<PAGE>


                         EVANS, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

4.    Common Stock, continued

      In October 1995, the Financial Accounting Standards Board issued Statement
      of  Financial   Accounting  Standards  (SFAS)  No.  123,  "Accounting  for
      Stock-Based Compensation",  which establishes a fair value based method of
      accounting  for  employee  stock-based  compensation.  Under this  method,
      compensation cost is measured at the grant date, based on the market price
      of the stock at that date,  and is  recognized as expense over the life of
      the  option.  SFAS 123  encourages  companies  to adopt a fair value based
      method of accounting  for such plans but continues to allow the use of the
      intrinsic value method  prescribed by Accounting  Principles Board Opinion
      (APB) No. 25,  "Accounting  for Stock Issued to  Employees".  As permitted
      under SFAS 123,  the  Company  has  elected  to  continue  accounting  for
      stock-based  compensation  in accordance  with APB No. 25. The differences
      between the recognition  and measurement  provisions of FAS 123 and APB 25
      are  immaterial  to the  Company's  financial  condition  and  results  of
      operations.

5.    Service Charges

      Service charges on customer credit accounts are netted against selling and
      general expenses.  Service charges amounted to $1,670,000,  $1,811,000 and
      $2,142,000 in the years ended  February 28, 1998,  March 1, 1997 and March
      2, 1996 respectively.

6.    Income Taxes

      The  components  of the net deferred tax asset as of February 28, 1998 and
      March 1, 1997 were as follows:
                                         1998                 1997
                                         ----                 ----

      Deferred tax assets:
            Net operating loss            $10,092,000       $ 10,721,000
            Sales taxes                       318,000            319,000
            Vacations                         257,000            263,000
            Property and equipment            490,000                 -
            Other                             961,000          1,313,000
            Valuation allowance           (11,855,000)       (11,546,000)
                                          -----------        -----------
      Total deferred tax assets               263,000          1,070,000


<PAGE>


                         EVANS, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

6.    Income Taxes, continued

            Deferred tax liabilities:
            Property and equipment                    -       (909,000)
            Accounts receivable                (263,000)      (161,000)
                                               --------       -------- 
      Total deferred tax liabilities           (263,000)    (1,070,000)
                                               --------       -------- 
      Net deferred tax balance            $      -0-        $    -0-
                                               ========       ========
      The Company has recorded a valuation  allowance with respect to the future
      tax benefits as a result of the uncertainty of their ultimate realization.

      The  Company  has net  operating  loss  carryforwards  of  approximately
      $23,078,000 available to offset future taxable income.  These  
      carryforwards  expire in the years 2005 through 2012.

      The provision for income taxes is comprised of:

                             1998           1997          1996
                             ----           ----          ----
        Current
         Federal           $36,000
        State               44,000        $83,000      $57,000
                            ------         ------       ------
        Deferred
         Federal
        State              _______         _______       _______  
        Total              $80,000         $83,000       $57,000
                           =======         =======       =======
      The income tax provision differed from a provision computed at the U.S.
statutory   rate as follows:
                                    1998        1997         1996
                                    ----        ----         ----
      Statutory federal tax rate   (34.0)%     (34.0)%      34.0%
      Increase (decrease) in
       valuation allowance          34.2        33.5       (25.1)

      State taxes on income, net
       of federal tax benefit        3.8         1.2        12.9

      Other                          6.6         1.1        (2.2)
                                    -----       -----       ------

                                    10.6%         1.8%      19.6%
                                    =====       ======      =====


<PAGE>


                         EVANS, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

7.    Profit-Sharing Plan

      The Company  maintains a profit-sharing  plan covering  substantially  all
      eligible employees. Employees become eligible after completing one year of
      employment  in which they complete  1,000 hours of service.  Contributions
      from  employees  are  based on a  percentage  of their  compensation  on a
      before-tax  basis.  The Company's  contribution  to the Plan is determined
      annually by the Board of Directors of the Company. The Company contributed
      $0, $38,000 and $27,000 to the Plan for the years ended February 28, 1998,
      March 1, 1997 and March 2, 1996, respectively.

8.    Leases

      The  Company  operates  primarily  in leased  facilities  under  long-term
      leases.  Noncancelable lease terms generally range from 2 to 12 years. The
      principal  leases are for the corporate  offices and for sales  facilities
      with  options to renew for  additional  periods  and  provide  for minimum
      annual rentals plus additional rentals based on a percentage of sales, and
      payment of taxes, insurance and maintenance costs.

      Future minimum lease payments  required under  operating  leases that have
      initial or remaining  noncancelable  lease terms in excess of one year are
      as follows:

                  1999                                $  3,399,000
                  2000                                   2,905,000
                  2001                                   2,820,000
                  2002                                   2,619,000
                  2003                                   2,081,000
                  Total thereafter                      10,322,000
                                                       -----------
                  Total minimum payments required      $24,146,000
                                                       ===========




<PAGE>


                         EVANS, INC. AND SUBSIDIARIES

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

8.    Leases, continued

      The following  schedule shows the composition of total rental expenses for
      all operating leases:
                                   1998       1997          1996
                                   ----       ----          ----
      Minimum rentals         $2,432,000   $2,374,000   $2,578,000
      Contingent rentals       6,717,000    6,053,000    7,010,000
                              $9,149,000  $8,427,000    $9,588,000


9.    Earnings (loss) per Share

      The  following  table  sets  forth the  computation  of basic and  diluted
      earnings per share:

                                       Net        Weighted
                                  Earnings(loss) Avg. Shares   Per Share
                                   (Numerator)  (Denominator)   Amounts
       Year ended February 28,
       1998
          Basic EPS:
            Loss available to
            common shareholders      $(835,000)     4,973,819     $(0.17)
                                     ==========     =========     =======
                                                             
            Effect of dilutive options                      0
                                                    ---------             
         Dilutive EPS:
           Income available to
           common shareholders
           plus assumed conversions $(835,000)      4,973,819     $(0.17)
                                     ==========     =========     =======
            
       Year ended March 1, 1997 Basic EPS:
            Loss available to
            common shareholders    $(4,724,000)     4,918,301     $(0.96)
                                   ============     =========     =======

            Effect of dilutive options                      0
                                                    ---------

         Dilutive EPS:
          Income available to
          common shareholders
          plus assumed conversions $(4,724,000)     4,918,301     $(0.96)
                                   ============     =========     =======
            



<PAGE>


                         EVANS, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

9.    Earnings (loss) per Share, continued

       Year ended March 2, 1996 Basic EPS:
            Earnings available to
              common shareholders      $234,000     4,918,301       $0.05
                                       ========     =========       =====

            Effect of dilutive options                      0
                                                    ---------             
         Dilutive EPS:
           Income available to
           common shareholders 
           plus assumed conversions    $234,000     4,918,301       $0.05
                                       ========     =========       =====
            
10.   Sale of Building

      On June 19,  1997,  the Company  entered  into a contract for the sale and
      leaseback of its flagship store and corporte office headquarters  building
      located at 36 S. State Street in Chicago,  Illinois with a purchase  price
      of $5,000,000.

      The  transaction  was  consumated  on December  17,  1997.  As part of the
      agreement  the  Company  executed  15-year and  10-year  lease  agreements
      covering  61,775 square feet for the existing  retail  premises and 36,020
      square feet for the corporate operation space, respectively. The agreement
      also required a $500,000 deposit to secure the lease obligations.  The net
      proceeds of $4,100,000 generated from the sale were used first to pay down
      the unamortized  senior secured long-term payable  obligation and then the
      secured revolving loan obligation.

11.   Acquisition

      On August 4, 1997,  the Company  entered  into a purchase  agreement  with
      Triomphe  Fourrures  Incorporated  to acquire certain assets in connection
      with the  operation  of the  Maximilian(R)  Fur  Salons at  Bloomingdale's
      Stores, a division of Federated Department Stores, Inc.

      The total purchase  price was  $5,387,000,  which  included  inventory and
      operating assets as well as the world-wide fur trademark of Maximilian(R).
      A down payment of $1,573,000  was made on August 7, 1997 and the first and
      second  installments  of  $524,000  each were paid on November 4, 1997 and
      February 4, 1998 respectively,  quarterly installments of $262,000 are due
      from May 4, 1998 through  November 4, 1999,  with a final  installment  of
      $932,000 due on December 30, 1999.



<PAGE>


                            EVANS, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

11.   Acquisition, continued

      The acquisition,  which was effective August 2, 1997, was accounted for by
      the purchase  method of accounting  and,  accordingly,  the net assets and
      results  of  operations   were   included  in  the   Company's   condensed
      consolidated  financial  statements  commencing  on  August 3,  1997.  The
      Maximillian(R)trademark  was allocated  $1,738,000  of the purchase  price
      with the remaining price exceeding the fair market value of the net assets
      acquired by $500,000  which was recorded as goodwill.  The  trademark  and
      goodwill  are  being  amortized  over a  forty  and  twenty  year  period,
      respectively, on a straight-line basis.

      On June 3, 1998,  the Company  amended its agreement and  promissory  note
      related to the  acquisition of the assets in connection with the operation
      of Maximilian(R) Fur Salons.  The amendments provide for a revised payment
      plan for the  quarterly  installments  due May 4, 1998 and August 4, 1998.
      The payments will be made as follows:  $100,000 due June 30, 1998, $84,850
      due monthly from August 31, 1998 through  November 30, 1998 with the final
      installment  due  December  15,  1998.  These  payments  will be paid with
      interest at a rate of 10% per annum.  The remaining debt schedule will 
      remain intact.


<PAGE>



Item 9.     Changes in and Disagreements with Accountants on
            Accounting and Financial Disclosure

None.

                                   PART III


Item 10.    Directors and Executive Officers of the Registrant

The Company will file with the Securities  and Exchange  Commission a definitive
Proxy  Statement no later than 120 days after the close of its fiscal year ended
February 28, 1998 (the "Proxy Statement"). The information required by this Item
and not given in Item 4A,  Executive  Officers of the Registrant is incorporated
by reference from the Proxy Statement.

Item 11.    Executive Compensation

The  information  required by this Item is  incorporated  by reference  from the
Proxy Statement.

Item 12.    Security Ownership of Certain Beneficial Owners and Management

The  information  required by this Item is  incorporated  by reference  from the
Proxy Statement.

Item 13.    Certain Relationships and Related Transactions

The  information  required by this Item is  incorporated  by reference  from the
Proxy Statement.


<PAGE>


                                   PART IV

Item 14.     Exhibits, Financial Statement
             Schedules and Reports on Form 8-K

   a. (1)    Financial Statements                              Pages

             Included in Part II of this report:

             Report of Independent Accountants                  16

             Financial Statements:
             Consolidated Balance Sheets, February 28,
             1998                                               17
             and March 1, 1997

             Consolidated  Statements of Operations for
             the years ended February 28, 1998, 
             March 1, 1997 and March 2, 1996                    18

             Consolidated  Statements of Changes in 
             Shareholders' Equity for the years ended 
             February 28, 1998, March 1, 1997 and 
             March 2, 1996                                      19

             Consolidated Statements of Cash Flows for
             the years ended February 28, 1998, March 1,
             1997 and March 2, 1996                             20

             Notes of Consolidated Financial Statements        21-32

   a. (2)    Financial Statement Schedules

             Included in Part IV of this report:

             Report of Independent Accountants                  43

             Schedules:
             II.  Valuation and Qualifying Accounts and
             Reserves for the years ended February 28,
             1998, March 1, 1997 and March 2,                   44
             1996

   Notes:    Schedules  other than those  listed are omitted for the reason that
             they are inapplicable,  are not required, or equivalent information
             has been included elsewhere herein.



<PAGE>



Item 14.  Exhibits, Financial Statement Schedules and Reports on Form
          8-K, continued

 a. (3)   Exhibits

   3.1    The Certificate of Incorporation of the Company is incorporated herein
          by  reference  to  Exhibit  3 (a) to Form 2-1 under  Registration  No.
          2-21433  and  the   Certificate   of  Amendment  of   Certificate   of
          Incorporation  effective  July  15,  1968 is  incorporated  herein  by
          reference to Exhibit 3(c) to Form S-1 under  Registration  No. 2-29193
          and all amendments thereto.

   3.2    Bylaws as presently in effect are herein  incorporated by reference to
          the Form 10-K filed for the fiscal year ending February 28, 1981 (File
          No. 0-1500).

   4.1    Loan agreement dated August 16, 1978, as amended,  between  Registrant
          and The Prudential  Insurance  Company of American relating to 10.125%
          promissory  note due August 15, 1993 as  modified by Credit  Agreement
          dated August 30, 1984 between  Registrant and Prudential  Interfunding
          Corporation  relating  to a revolving  loan  agreement  not  exceeding
          $21,000,000  terminating  August 30,  1988 is herein  incorporated  by
          reference  to the Form 10-Q filed for the quarter  ended  September 1,
          1984 (File No. 0-1500).

   4.2    Loan agreement dated October 29, 1984 modifying credit agreement dated
          August 30,  1984 with  Prudential  Interfunding  Corporation,  whereby
          Registrant  reduced its revolving loan commitment from  $21,000,000 to
          $16,000,000  and converted  $4,200,000  into a fixed rate term loan at
          13.725% due October 1994, is herein  incorporated  by reference to the
          10-Q filed for the quarter ended December 1, 1984 (File No. 0-1500).

   4.3    Loan  agreement  dated October 15, 1985  effective as of September 30,
          1985   with   Prudential   Interfunding   Corp.   whereby   Prudential
          Interfunding  Corp.  will  make  available  to  Registrant  up to  and
          including  September 30, 1989 sums which shall not exceed  $21,000,000
          at interest  rates equal to 1.875% per annum plus the rate  charged to
          Prudential  Interfunding Corp. by an affiliate on 30-day dealer-placed
          promissory notes is hereby  incorporated by reference to the Form 10-Q
          filed for the quarter ended November 30, 1985.

   4.4    Loan agreement  (Promissory Note) dated August 6, 1986 with Prudential
          Insurance Company of America (Prudential) whereby Prudential will make
          available to Registrant  $17,500,000 with interest at a rate of 9.375%
          on the unpaid  balance.  This agreement  which  replaces  Registrant's
          agreement   with   Prudential   dated   October  15,  1985  is  herein
          incorporated  by  reference  to the Exhibit to the Form 10-Q filed for
          the quarter ended August 30, 1986.



<PAGE>



Item 14.  Exhibits, Financial Statement Schedules and Reports on Form
          8-K, continued

 a. (3)   Exhibits, continued

   4.5    Amendment  dated July 6, 1990 which  amends the Loan  Agreements  with
          Prudential Insurance Company of America dated August 16, 1978 and with
          Prudential  Interfunding  Corporation dated August 30, 1984 and August
          6, 1986.

   4.6    Amended and restated  secured credit  agreement dated August 9,
          1990 between  registrant  and American  National Bank and Trust
          Company  of  Chicago,  individually  and  as  agent  is  herein
          incorporated  by  reference  to the  Exhibit  to the Form  10-Q
          filed  for  the  quarter  ended   September  1,  1990  and  the
          amendment  thereto dated  December 7, 1990 is  incorporated  by
          reference  to the  Exhibit  to Form 10-Q  file for the  quarter
          ended  December 1, 1990. In addition,  letters of  notification
          pursuant to section 7.3(c) of the amended and restated  secured
          credit  agreement are herein  incorporated  by reference to the
          exhibit to the Form 10-Q filed for the quarter  ended  December
          1, 1990.

   4.7    Amendment  dated August 9, 1990 which amends the loan  agreements with
          Prudential  Insurance  Company of American  dated  August 16, 1978 and
          with  Prudential  Interfunding  Corporation  dated August 30, 1984 and
          August 6, 1986 is herein  incorporated  by reference to the Exhibit to
          the Form 10-Q filed for quarter ended September 1, 1990.

   4.8    Amendment  dated June 20, 1991 which  amends the amended and  restated
          secured credit  agreement dated August 9, 1990 between  registrant and
          American National Bank and Trust Company of Chicago,  individually and
          as agent and the amendment thereto dated December 7, 1990.

   4.9    Amendment  dated June 20, 1991 which amends the loan  agreements  with
          Prudential Insurance Company of America dated August 16, 1978 and with
          Prudential  Interfunding  Corporation dated August 30, 1984 and August
          6, 1986 and the amendment thereto dated August 9, 1990.

  4.10    Amended  and  Restated  Revolving  Note  dated June 20,  1991  between
          registrant and American National Bank, individually and as agent.

  4.11    Amendment dated February 7, 1992 which amends the amended and restated
          secured credit  agreement dated August 9, 1990 between  registrant and
          American National Bank and Trust Company of Chicago,  individually and
          as agent and the  amendments  thereto dated  December 7, 1990 and June
          20, 1991.



<PAGE>



Item 14.  Exhibits, Financial Statement Schedules and Reports on Form
          8-K, continued

 a. (3)   Exhibits, continued

  4.12    Amendment dated February 7, 1992 which amends the loan agreements with
          Prudential Insurance Company of America dated August 16, 1978 and with
          Prudential  Interfunding  Corporation dated August 30, 1984 and August
          6, 1986 and the  amendments  thereto dated August 9, 1990 and June 20,
          1991.

  4.13    Second  Amended and Restated  Revolving  Noted dated  February 7, 1992
          between  registrant and American  National Bank,  individually  and as
          agent.

  4.14    Amendment  dated May 29,  1992,  which amends the amended and restated
          secured credit  agreement dated August 9, 1990 between  registrant and
          American National Bank and Trust Company of Chicago,  individually and
          as agent and the amendments  thereto dated December 7, 1990,  June 20,
          1991 and February 7, 1992.

  4.15    Amendment  dated May 29, 1992 which  amends the loan  agreements  with
          Prudential Insurance Company of America dated August 16, 1978 and with
          Prudential  Interfunding  Corporation dated August 30, 1984 and August
          6, 1986 and the amendments thereto dated August 9, 1990, June 20, 1991
          and February 7, 1992.

  4.16    Second  Amended and restated  secured credit  agreement  dated May 28,
          1993,  which  amends and  restates  the amended and  restated  secured
          credit agreement dated August 9, 1990 between  registrant and American
          National Bank and Trust Company of Chicago,  individually and as agent
          and the amendments  thereto dated December 7, 1990,  June 20, 1991 and
          February 7, 1992 and May 29, 1992.

  4.17    Amendment  dated May 28, 1993,  which amends the loan  agreements with
          Prudential Insurance Company of America dated August 16, 1978 and with
          Prudential  Interfunding  Corporation dated August 30, 1984 and August
          6, 1986 and the amendments thereto dated August 9, 1990, June 20, 1991
          and February 7, 1992 and May 29, 1992.

  4.18    Amendment  dated May 10,  1994,  which  amends the second  amended and
          restated   secured  credit   agreement  dated  May  28,  1993  between
          registrant  and American  National  Bank and Trust Company of Chicago,
          individually and as agent.



<PAGE>



Item 14.  Exhibits, Financial Statement Schedules and Reports on Form
          8-K, continued

 a. (3)   Exhibits, continued

  4.19    Amendment  dated May 10, 1994,  which amends the loan  agreement  with
          Prudential  Interfunding  Corporation  dated  August  6,  1986 and the
          amendments  thereto dated August 9, 1990,  June 20, 1991,  February 7,
          1992, May 29, 1992 and May 28, 1993.

  4.20    Amendment dated January 13, 1995,  which amends the second amended and
          restated   secured  credit   agreement  dated  May  28,  1993  between
          registrant  and American  National  Bank and Trust Company of Chicago,
          individually  and as agent,  and the  amendment  thereto dated May 10,
          1994.

  4.21    Amendment dated January 13, 1995, which amends the loan agreement with
          Prudential  Interfunding  Corporation  dated  August  6,  1986 and the
          amendments  thereto dated August 9, 1990,  June 20, 1991,  February 7,
          1992, May 28, 1993 and May
          10, 1994.

  4.22    Amendment  dated February 17, 1995 which amends the second amended and
          restated   secured  credit   agreement  dated  May  28,  1993  between
          registrant  and American  National  Bank and Trust Company of Chicago,
          individually  and as agent and the  amendments  thereto  dated May 10,
          1994 and January 13, 1995.

  4.23    Amendment  dated  February 17, 1995 which  amends the loan  agreements
          with Prudential  Interfunding  Corporation  dated August 9, 1990, June
          20, 1991, February 7, 1992, May 28, 1993,
          May 10, 1994 and January 13, 1995.

  4.24    Amendment  dated  March 31, 1995 which  amends the second  amended and
          restated   secured  credit   agreement  dated  May  28,  1993  between
          registrant  and American  National  Bank and Trust Company of Chicago,
          individually  and as agent and the  amendments  thereto  dated May 10,
          1994, January 13, 1995, February 17, 1995 and March 3, 1995.

  4.25    Amendment  dated March 31, 1995 which amends the loan  agreements with
          Prudential  Interfunding  Corporation  dated  August  6,  1986 and the
          amendments  thereto dated August 9, 1990,  June 20, 1991,  February 7,
          1992,  May 28, 1993,  May 10, 1994,  January 13, 1995 and February 17,
          1995.

  4.26    Amendment  dated  March 3, 1995 which  amends the second  amended  and
          restated   secured  credit   agreement  dated  May  28,  1993  between
          registrant  and American  National  Bank and Trust Company of Chicago,
          individually  and as agent and the  amendments  thereto  dated May 10,
          1994, January 13, 1995 and February 17, 1995.



<PAGE>



Item 14.  Exhibits, Financial Statement Schedules and Reports on Form
          8-K, continued

 a. (3)   Exhibits, continued

  4.27    Letter of termination  dated May 31, 1995, which terminates the second
          amended  and  restated  secured  credit  agreement  dated May 28, 1993
          between  registrant  and American  National  Bank and Trust Company of
          Chicago,  individually  and as agent and the amendments  thereto dated
          May 10, 1994,  January 13,  1995,  February 17, 1995 and March 3, 1995
          and March 31, 1995.

  4.28    Letter of  termination  dated May 31, 1995 which  terminates  the loan
          agreements with Prudential  Interfunding  Corporation  dated August 6,
          1986 and the amendments  thereto dated August 9, 1990,  June 20, 1991,
          February 7, 1992,  May 28,  1993,  May 10,  1994,  January  13,  1995,
          February 17, 1995 and March 31, 1995.

  4.29    Loan and Security  Agreement dated May 31, 1995 between registrant and
          Transamerica Business Credit Corporation.

  4.30    Amendment  dated  October 3, 1995 which  amends the Loan and  Security
          Agreement dated May 31, 1995 with Transamerica
          Business Credit Corporation.

  4.40    Amendment  dated  November 20, 1995 which amends the Loan and Security
          Agreement  dated  May  31,  995  with  Transamerica   Business  Credit
          Corporation and the amendment thereto dated
          October 3, 1995.

  4.50    Amendment  dated  January 5, 1996 which  amends the Loan and  Security
          Agreement  dated  May  31,  1995  with  Transamerica  Business  Credit
          Corporation and the amendments thereto dated
          October 3, 1995 and November 20, 1995.

  4.51    Amendment  dated  May 30,  1996  which  amends  the Loan and  Security
          Agreement  dated  May  31,  1995  with  Transamerica  Business  Credit
          Corporation and the amendments thereto dated October 3, 1995, November
          20, 1995 and January 5, 1996.

  4.52    Amendment  dated  July 5,  1996  which  amends  the Loan and  Security
          Agreement  dated  May  31,  1995  with  Transamerica  Business  Credit
          Corporation and the amendments thereto dated October 3, 1995, November
          20, 1995, January 5, 1996 and May
          30, 1996.


<PAGE>








Item 14.  Exhibits, Financial Statement Schedules and Reports on Form
          8-K, continued

 a. (3)   Exhibits, continued

  4.53    Amendment  dated  October 11, 1996 which  amends the Loan and Security
          Agreement  dated  May  31,  1995  with  Transamerica  Business  Credit
          Corporation and the amendments thereto dated October 3, 1995, November
          20, 1995, January 5, 1996, May 30,
          1996 and July 5, 1996.

  4.54    Amendment  dated  November 25, 1996 which amends the Loan and Security
          Agreement  dated  May  31,  1995  with  Transamerica  Business  Credit
          Corporation and the amendments thereto dated October 3, 1995, November
          20, 1995, January 5, 1996, May 30,
          1996, July 5, 1996 and October 11, 1996.

  4.55    Amendment  dated  January 9, 1997 which  amends the Loan and  Security
          Agreement  dated  May  31,  1995  with  Transamerica  Business  Credit
          Corporation and the amendments thereto dated October 3, 1995, November
          20, 1996,  January 5, 1996,  May 30, 1996,  July 5, 1996,  October 11,
          1996 and November 25, 1996.

  4.56    Amendment  dated  April 17,  1997 which  amends the Loan and  Security
          Agreement  dated  May  31,  1995  with  Transamerica  Business  Credit
          Corporation and the amendments thereto dated October 3, 1995, November
          20, 1995,  January 5, 1996,  May 30, 1996,  July 5, 1996,  October 11,
          1996, November 25, 1996 and
          January 9, 1997.

  4.57    Letter of termination  dated June 17, 1997,  which terminates the Loan
          and  Security  Agreement  dated  May 31,  1995,  as  amended,  between
          registrant and Transamerica Business Credit Corporation.

  4.58    Loan and Security Agreement dated June 16, 1997 between registrant and
          Jackson National Life Insurance  Company, a Michigan Insurance Company
          with PPM Finance, Inc. as Attorney-in fact.

  4.59    Amendment  dated  August 7, 1997 which  amends  the Loan and  Security
          Agreement dated June 16, 1997 between Jackson  National Life Insurance
          Company,  a Michigan  Insurance  Company  with PPM  Finance,  Inc.  as
          Attorney-in-fact.



<PAGE>


Item 14.      Exhibits, Financial Statement Schedules and Reports on Form
8-K,                     continued

a.  (3)      Exhibits, continued

  4.60    Amendment  dated  May 28,  1998  which  amends  the Loan and  Security
          Agreement dated June 16, 1997 between Jackson  National Life Insurance
          Company,  a Michigan  Insurance  Company  with PPM  Finance,  Inc.  as
          Attorney-in-fact and the amendment
          thereto dated August 7, 1997.

  10.1    1971  Stock  Option  Plan of the  Company  is  incorporated  herein by
          reference to Appendix A of the Company's  definitive  proxy  statement
          for its annual meeting held July 11, 1978 (File No.
          0-1500).

  10.2    Deferred  Compensation Plan dated July 8, 1975 is incorporated  herein
          by  reference  to Exhibit 4 to the Form 10-K filed for the fiscal year
          ended February 28, 1976 and the amendment  thereto dated July 14, 1977
          is  incorporated  herein by  reference to the Exhibit to the Form 10-K
          filed for the fiscal year ended February 25, 1978 (File No. 0-1500).

  10.4    Key Employees'  Supplemental  Medical  Expense  Benefit Plan is herein
          incorporated  by  reference to the Form 10-K for the fiscal year ended
          February 28, 1981 (File No. 0-1500).

  10.5    Employment  Agreement  dated as of  November  17,  1982 with  David B.
          Meltzer is  incorporated  by reference to the Form 10-K for the fiscal
          year ended February 28, 1981 (File No. 0-1500)

  10.6    Stock purchase  agreement  dated December 17, 1984 is  incorporated by
          reference to the exhibit to the Form S-1 Registration  statement dated
          June 27, 1986.

  10.7    Letter  agreement  dated  January 4, 1982 and May 18, 1983 between the
          Company and each of two officer is  incorporated  by  reference to the
          exhibit to the Form S-1 Registration statement dated June 27, 1986.

  10.8    Credit and Security  Agreement  with American  National Bank and Trust
          Company of Chicago dated July 6, 1990.

  10.9    Inter-Creditor  Agreement dated July 6, 1990,  between American
          National  Bank and Trust  Company  of  Chicago  and  Prudential
          Insurance Company of America.

  10.10   Commitment Letter dated June 29, 1990 for the secured revolving credit
          agreement with American National Bank and Trust Co. of Chicago.


<PAGE>


Item 14.      Exhibits, Financial Statement Schedules and Reports on Form
8-K,                     continued

a.  (3)      Exhibits, continued

  10.11   Employment  agreement  dated  July  5,  1990  with  Leonard  Levey  is
          incorporated  by  reference  to the Exhibit to the form 10-Q filed for
          the quarter ended June 2, 1990 and the Amendment  thereto dated August
          21, 1990 is  incorporated by reference to the Exhibit to the form 10-Q
          filed for the quarter ended September 1, 1990.

  10.12   Commitment letter dated January 20, 1992 for certain  modifications to
          the amended and restated secured credit agreement dated August 9, 1990
          and as amended June 20, 1991,  between  registrant,  American National
          Bank and Trust  Company of  Chicago,  individually  and as agent,  the
          Prudential   Insurance   Company  of  America,   and  the   Prudential
          Interfunding Corporation.

  10.13   Purchase  agreement  dated  as of  January  13,  1995  by and  between
          registrant and Gilson, Incorporated, a Delaware Corporation.

  10.14   Covenant not to compete  agreement dated as of January 13, 1995
          by and between  registrant,  Karl B.  Gittelman  and C. Richard
          Gittelman.

  10.15 Warrant to purchase shares of registrant's common stock.

  10.16 Real Estate Purchase Agreement dated as of June 19, 1997.

  10.17   Purchase  Agreement dated August 4, 1997 by and between Registrant and
          Triomphe   Fourrures,   Incorporated,   a   subsidiary   of  Revillon,
          Incorporated, a New York Corporation.

  10.18   Amendment  dated June 3, 1998 to Purchase  Agreement  dated  August 4,
          1997 by and between Registrant and Triomphe Fourrures, Incorporated, a
          subsidiary of Revillon, Incorporated, a New York Corporation.

  21.1    A list of the  Registrant's  subsidiaries is incorporated by reference
          to the Form 10-K filed for the fiscal  year ended  March 1, 1980 (File
          No. 0-1500).

   b.     Reports on Form 8-K

          Items  other  than  those  listed  are  omitted  because  they are not
          required.


<PAGE>










                      REPORT OF INDEPENDENT ACCOUNTANTS



To the Shareholders and
  Board of Directors
Evans, Inc.


Our  report  on  the  consolidated  financial  statements  of  Evans,  Inc.  and
Subsidiaries  is included on page 16 of this Form 10-K. In  connection  with our
audit of such financial  statements,  we have also audited the related financial
statement schedule listed in the index on page 34 of this Form 10-K.

In our  opinion,  the  financial  statement  schedule  referred  to above,  when
considered  in  relation  to the basic  financial  statements  taken as a whole,
presents  fairly,  in all  material  respects,  the  information  required to be
included therein.



                                    COOPERS & LYBRAND L.L.P.



June 4, 1998
Chicago, Illinois


<PAGE>
<TABLE>


                         EVANS, INC. AND SUBSIDIARIES

         SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

            for the years ended February 28, 1998,  March 1, 1997
                       and March 2, 1996 ($ IN THOUSANDS)


<CAPTION>

--------------------------------------------------------------------------------------------------------------
              Column A                  Column B              Column C              Column D      Column E
--------------------------------------------------------------------------------------------------------------

                                                               Additions

                                                     ---------------------------
                                                        (1)            (2)
                                      Balance at     Charged to     Charged to                   Balance at
                                     Beginning of    Costs and        Other                        End of
            Description                 Period        Expenses       Accounts    Deduction (a)     Period
--------------------------------------------------------------------------------------------------------------
<S>                                  <C>             <C>            <C>          <C>            <C>

Year ended February 28, 1998
Allowance for doubtful accounts          $755           $416                          $636          $535

Year ended March 1, 1997
Allowance for doubtful accounts          $864           $621                          $730          $755

Year ended March 2, 1996
Allowance for doubtful accounts          $794           $600                          $530          $864
--------------------------------------------------------------------------------------------------------------

<FN>
Note: (a) Uncollectible accounts receivable and inventory charged off, net of
recoveries.
</FN>
</TABLE>


<PAGE>



                                  SIGNATURES

      Pursuant  to the  requirements  of Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf of the undersigned, thereunto duly authorized.

                              EVANS, INC.

                              By:   William E. Koziel
                                    William E. Koziel
                                    Vice President and Chief Financial Officer
                              Date:

      Pursuant to the requirements of the Securities  Exchange Act of 1934, this
Report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the Capacities and on the dates indicated.

 Signature                      Title                   Date
-----------              -------------------           --------------

David B. Meltzer        Chairman of the Board            June 8, 1998
----------------
David B. Meltzer

Robert K. Meltzer       President and Chief Executive    June 8, 1998
-----------------       Officer         
Robert K. Meltzer       

Samuel B. Garber        Vice President, General Counsel  June 8, 1998
-----------------       and Secretary
Samuel B. Garber                

Ernest R. Wish          Director                         June 8, 1998
-----------------
Ernest R. Wish

Harold Sussman          Director                         June 8, 1998
----------------
Harold Sussman

Dennis Bookshester      Director                         June 8, 1998
------------------
Dennis Bookshester

Gwendolyn L. Stanback   Director                         June 8, 1998      
---------------------
Gwendolyn L. Stanback

Edmond D. Cicala        Director                         June 8, 1998
----------------
Edmond D. Cicala
<PAGE>

                                EVANS, INC. AND SUBSIDIARIES

                                     INDEX TO EXHIBITS




            Exhibit                                   Page Nos.

              4.60                                     47-52

             10.18                                     53-63

<PAGE>
                      SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT


            THIS  SECOND   AMENDMENT  TO  LOAN  AND  SECURITY   AGREEMENT  (this
"Amendment")  is made and entered into as of this 28th day of May,  1998, by and
among EVANS, INC., a Delaware  corporation  ("Evans"),  KOSLOW'S,  INC., a Texas
corporation   ("Koslow's"),   EVANS-ROSENDORF  OF  MARYLAND,  INC.,  a  Delaware
corporation  ("Rosendorf"  collectively  referred to with Evans and Koslows, the
"Borrowers") and JACKSON NATIONAL LIFE INSURANCE  COMPANY,  a Michigan insurance
corporation, ("Jackson" or "Lender").

                             PRELIMINARY STATEMENTS

      A.  Borrowers  and Lender have entered into that certain Loan and Security
Agreement,  dated June 16, 1997,  as amended from time to time and most recently
by that certain First  Amendment to Loan and Security  Agreement dated August 7,
1997 (as amended, the "Loan Agreement").

      B. The Borrowers  have each  requested  that the Lender  amend,  modify or
waive the Borrowers'  compliance  with certain  covenants  contained in the Loan
Agreement  and the Lender is willing  to amend,  modify or waive the  Borrowers'
compliance  with such  covenants,  subject to the terms and  conditions  of this
Agreement.

      NOW,  THEREFORE,  in  consideration  of the premises herein  contained and
other good and valuable consideration,  the receipt and sufficiency of which are
hereby  acknowledged,  the  parties,  intending  to be legally  bound,  agree as
follows:

                                    AGREEMENT

                                    ARTICLE I

                                   Definitions

      1.01  Capitalized  terms used in this  Amendment  are  defined in the Loan
Agreement as amended hereby, unless otherwise stated.


<PAGE>


                                   ARTICLE II

                          Amendments to Loan Agreement

      2.01 Amendments to Section 10.3 Financial Covenants.  Sections 10.3(a)(ii)
and (b) are deleted in their  entirety and the following is  substituted in lieu
thereof.


      "(ii)  Borrower and Borrowing  Subsidiaries  will not permit  consolidated
      EBITDA to be less than $1,700,000 for the period ending February 28, 1998.

      (iii) For each period  ending  specified  below,  Borrower  and  Borrowing
      Subsidiaries  shall  maintain  the  minimum  ratio of EBITDA  to  interest
      expense  specified  below for each Fiscal Quarter  calculated on a rolling
      twelve month basis:
            PERIOD ENDING                                   RATIO

      (a) May 31,  1998                                  .70:00 to 1:00 
      (b) August 31,  1998                               .10:00 to 1:00
      (c) November  30, 1998                             .70:00 to 1:00
      (d) February  28, 1999 and at all times
          thereafter                                       2:00 to 1:00

      (b)  Borrower  and  Borrowing  Subsidiaries  shall not  permit  Net Income
excluding  any  after-tax  extraordinary  gains or losses plus  deprecation  and
amortization  deducted in determining Net Income minus Capital  Expenditures not
financed to current  principal  maturities of long term debt and Capital  Leases
paid  during  such  period for the  periods  set forth below to be less than the
ratio set forth opposite each such period:

                         PERIOD                                    RATIO
Fiscal six month period ending nearest to February 28, 1998     2.03 to 1.00

Fiscal nine month period ending nearest to May 31, 1998         1.00 to 1.00

Fiscal twelve month period ending nearest to August 31, 1998   (1.15) to 1.00

Fiscal twelve month period ending nearest to November 30, 1998  (.80) to 1.00

Fiscal twelve month period ending nearest to February 28, 1999  1.30 to 1.00

Thereafter, for each rolling twelve month Fiscal Quarter"       1.25 to 1.00

                                   ARTICLE III

                   Waiver of Compliance with Certain Covenants

      Each of the  Borrowers  hereby  notifies the Lender that the period ending
February 28, 1998,  the Borrowers  were not in  compliance  with  Sections:  (x)
10.3(a)(ii),  and (y) 10.3(b) of the Loan Agreement. The Lender hereby agrees to
waive the items  set forth in  subparagraphs  (x) and (y) above and any Event of
Default which has resulted therefrom for the period up to and including the date
of this  Amendment.  It is understood and agreed that this is a one-time  waiver
and that this waiver is limited  specifically  to the 
<PAGE>
express  terms  hereof and shall not be  deemed a waiver  of or  consent  to any
other  matter.  Except as expressly  waived in accordance with this section,  
all of the provisions of the Loan  Agreement,  as amended  hereby are unmodified
and remain in full force and effect.

                                   ARTICLE IV

                                  Amendment Fee

      The  Borrower  hereby  agrees to pay to the  Lender on the date  hereof an
amendment fee in accordance  with the letter  agreement  executed by the parties
hereto dated as of the date hereof.

                                    ARTICLE V

                           Conditions to Effectiveness

      The continued effectiveness of this Amendment is subject to the receipt by
Lender of the final  audited  statements  of the  Borrower  for the fiscal  year
ending February 28, 1998, which shall be submitted to the Lender within ten days
of the date hereof and shall be substantially in the form provided to the Lender
in draft and shall show no material changes from such draft.

                                   ARTICLE VI

                  Ratifications, Representations and Warranties

      6.01  Ratifications.  The terms and provisions set forth in this Amendment
shall modify and supersede all  inconsistent  terms and  provisions set forth in
the Loan Agreement and the Other Agreements,  and, except as expressly  modified
and superseded by this Amendment, the terms and provisions of the Loan Agreement
and the Other  Agreements  are ratified and confirmed and shall continue in full
force and effect.  Borrower and each Borrowing  Subsidiary and Lender agree that
the Loan Agreement and other Agreements, as amended hereby, shall continue to be
legal, valid, binding and enforceable in accordance with their respective terms.

      6.02   Representations   and  Warranties.   Borrower  and  each  borrowing
Subsidiary  hereby  represent  and  warrant  to Lender  that (a) the  execution,
delivery and  performance of this Amendment has been authorized by all requisite
corporate action on the part of Borrower and each Borrowing  Subsidiary and will
not  violate  the  Articles  of  Incorporation  or Bylaws of  Borrower or either
Borrowing  Subsidiary;  (b) the representations and warranties  continued in the
Loan Agreement,  as amended  hereby,  are true and correct on and as of the date
hereof and on and as of the date of execution hereby as though made on and as of
each such date; (c) no Event of Default or event or condition which, with notice
or passage of time or both,  would constitute an Event of Default under the Loan
Agreement,  as amended hereby, has occurred and is continuing;  and (d) Borrower
and each  Borrowing  Subsidiary  are in full  compliance  with all covenants and
agreements contained in the Loan Agreement and the Other Agreements,  as amended
thereby.
<PAGE>

                                   ARTICLE VII

                            Miscellaneous Provisions

7.01  Survival  of  Representations  and  Warranties.  All  representations  and
warranties  made in the  Loan  Agreement  or any  Other  Agreements,  including,
without  limitation,  any document  furnished in connection with this Amendment,
shall  survive  the  execution  and  delivery  of this  Amendment  and the Other
Agreements,  and no investigation by Lender shall affect the representations and
warranties or the right of Lender to reply upon them.

      7.02 Reference to Loan Agreement. Each of the Loan Agreement and the Other
Agreements,  and any and all other  agreements,  documents or instruments now or
hereafter executed and delivered pursuant to the terms hereof or pursuant to the
terms of the Loan Agreement,  as amended hereby,  are hereby amended so that any
reference in the Loan Agreement and such other  Agreements to the Loan Agreement
or any such Other  Agreements  shall mean a reference to the Loan  Agreement and
the Other Agreements as amended hereby.

      7.03 Expenses of Agent. As provided in the Loan Agreement, Borrowers agree
to pay on  demand  all  reasonable  costs  and  expenses  incurred  by Lender in
connection with the preparation, negotiation and execution of this Amendment and
the  Other  Agreements   executed  pursuant  hereto,  and  any  all  amendments,
modifications,  and  supplements  thereto,  including  without  limitation,  the
reasonable costs and fees of Lender's legal counsel.

      7.04  Severability.  Any  provision of this  Amendment  held by a court of
competent  jurisdiction  to be  invalid  or  unenforceable  shall not  impair or
invalidate  the  remainder of this  Amendment  and the effect  thereof  shall be
confined to the provision so held to be invalid or unenforceable.

      7.05  Successors  and  Assigns.  This  Amendment is binding upon and shall
insure to the benefit of Lender and Borrower and each  Borrowing  Subsidiary and
their  respective  successors  and assigns,  except that  Borrower and Borrowing
Subsidiaries  may not  assign or  transfer  any of their  rights or  obligations
hereunder without the prior written consent of Lender.

      7.06  Counterparts.  This  Amendment  may  be  executed  in  one  or  more
counterparts,  each of which when so executed shall be deemed to be an original,
but all of  which  when  taken  together  shall  constitute  one  and  the  same
instrument.

      7.07 Effect of Waiver. No consent or waiver, express or implied, by Lender
to or for any breach of or deviation  from any covenant or condition by Borrower
or  Borrowing  Subsidiaries  shall be deemed a consent to or waiver of any other
breach of the same or any other covenant, condition or duty.

      7.08  Headings.  The headings,  captions,  and  arrangements  used in this
Amendment are for  convenience  only and shall no affect the  interpretation  of
this Amendment.
<PAGE>

      6.09  Applicable  Law. THIS  AMENDMENT AND ALL OTHER  AGREEMENTS  EXECUTED
PURSUANT  HERETO SHALL BE DEEMED TO HAVE MADE AND TO PERFORMABLE IN AND SHALL BE
GOVERNED BY AND CONSTRUED IN  ACCORDANCE  WITH THE INTERNAL LAWS OF THE STATE OF
ILLINOIS (WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW).

6.05 Final Agreement.  THE LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS,  EACH AS
AMENDED HEREBY,  REPRESENT THE ENTIRE  EXPRESSION OF THE PARTIES WITH RESPECT TO
THE SUBJECT  MATTER  HEREOF ON THE DATE THIS  AMENDMENT  IS  EXECUTED.  THE LOAN
AGREEMENT AND THE OTHER AGREEMENTS,  AS AMENDED HEREBY,  MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR,  CONTEMPORANEOUS  OR  SUBSEQUENT  ORAL  AGREEMENTS  OF THE
PARTIES  THERE  ARE  NO  UNWRITTEN  ORAL  AGREEMENTS  BETWEEN  THE  PARTIES.  NO
MODIFICATION,  RESCISSION, WAIVER, RELEASE OR AMENDMENT OF ANY PROVISION OF THIS
AMENDMENT SHALL BE MADE, EXCEPT BY A WRITTEN AGREEMENT SIGNED BY BORROWER,  EACH
BORROWING SUBSIDIARY AND LENDER.
<PAGE>

      Witness the due execution hereof by the respective duly authorized officer
so the undersigned as of the date first written above.

                                    EVANS, INC.



                              By: William E. Koziel
                                  -----------------
                                  William E. Koziel
                                  Vice President - Finance
                                  & Chief Financial Officer



                                    KOSLOW'S, INC.




                               By: William E. Koziel
                                  -----------------
                                  William E. Koziel
                                  Vice President - Finance
                                  & Chief Financial Officer



                                    EVANS-ROSENDORF, OF MARYLAND, INC.


                              By: William E. Koziel
                                  -----------------
                                  William E. Koziel
                                  Vice President - Finance
                                  & Chief Financial Officer



                              JACKSON NATIONAL LIFE INSURANCE COMPANY, as Lender

                             By: PPM America, Inc.,
                                 Attorney-in-Fact

                             By: Barbara Buck
                                 ----------------  
                                 Barbara Buck
                                 Vice President
 
<PAGE>
                                    AGREEMENT



      This Agreement made this __3__day of June,  1998, by and between  TRIOMPHE
FOURRURES INCORPORATED,  a subsidiary of REVILLON,  INCORPORATED ("Revillon"), a
New York Corporation  (hereinafter  called "Seller") and EVANS, INC., a Delaware
Corporation (hereinafter called "Evans").


                                  WITTNESSETH:

      WHEREAS,  BY PURCHASE AGREEMENT dated August 4, 1997, Seller sold to Evans
its retail fur business which operated certain Fur Departments in Bloomingdale's
Department Stores, and

      WHEREAS, Seller and Evans desire to modify said Purchase Agreement,

      NOW  THEREFORE,  in  consideration  of the  premises  and  of  the  mutual
covenants and  agreements of the parties  hereof,  it is hereby  covenanted  and
agreed as follows:

1. Section 4 of said Purchase  Agreement covering the balance of the installment
   payments  due on the  purchase  price  of the  Purchase  Agreement  shall  be
   modified  as set forth by the Amended and  Restated  Promissory  Notes in the
   form attached hereto as Exhibit 1.

2. All of the other  provision of said Purchase  Agreement  shall remain in full
   force and effect, without modification.


3. This Agreement may be executed in counterparts, each of which shall be deemed
   to be an  original,  but all of which shall  constitute  but one and the same
   instrument.


<PAGE>



   IN WITNESS  WHEREOF,  the  undersigned  have signed this  Agreement as of the
___3___ day of June, 1998.


ATTEST:                             TRIOMPHE FOURRURES INCORPORATED


_____________________________       By:___________________________

________________, Secretary         ______________________, President


ATTEST:                             REVILLON, INCORPORATED


_____________________________       By:___________________________

_________________, Secretary        _______________________, President


ATTEST:                             EVANS, INC.


___________________________         By:___________________________

_________________, Secretary        _____________________, President




<PAGE>


                      AMENDED AND RESTATED PROMISSORY NOTE

$846,742.00                                           June 3, 1998

      This  amended  and  restate  promissory  note  amends and  restates in its
entirety that certain  promissory note dated August 4, 1997 from EVANS,  INC. to
REVILLON, INCORPORATED in the amount of $1,185,438.80. The balance due under the
said promissory note is now $846,742.00.

      FOR VALUE RECEIVED,  the undersigned,  EVANS, INC., a Delaware corporation
with  offices at 36 South State  Street,  Chicago,  Illinois  60603  ("Debtor"),
HEREBY  PROMISES  TO PAY to the order of  Revillon,  Incorporated,  555  Madison
Avenue,  New York,  New York 10022 the principal sum of eight hundred  forty-six
thousand seven hundred forty- two and no dollars ($846,742.00) as follows:

            $32,304.40 on or before June 30, 1998 
            $27,408.80 on or before August 31, 1998.  
            $27,408.80 on or before  September 30, 1998
            $27,408.80 on or before October 31, 1998  
            $84,674.20 on or before November 4, 1998
            $27,408.80  on or before  November 30, 1998  
            $27,408.80 on or before December  15,  1998   
            $84,674.20  on  or  before  February  4,  1999
            $84,674.20  on or before May 4, 1999  
            $84,674.20 on or before August 4, 1999 
            $84,674.20 on or before  November 4, 1999  
            $254,022.60 on or before December 30, 1999

      Except as hereinafter  provided,  this Note shall not bear interest unless
the holder of this Note  ("Holder")  declares  this Note to be forthwith due and
payable  pursuant to the terms of the Note, in which event interest shall be due
on the  unpaid  balance  of  principal  of this  Note  from the due dates as the
maximum rate allowed by law.

      Notwithstanding the foregoing,  the installments of principal due June 30,
1998, August 31, 1998,  September 30, 1998, October 31, 1998,  November 30, 1998
and December 15, 1998 shall be paid with interest at the rate of ten percent per
annum from May 5, 1998 on the following amounts:

      (a)    with the installment due June 30, 1998, interest on $84,674.20;

      (b) with the installment  due August 31, 1998,  interest on $52,369.80 and
      interest on $84,674.20 beginning August 4, 1998;

      (c) with the installment due September 30, 1998, interest on $109,635.20;

      (d) with the installment due October 31, 1998, interest on $82,226.40;
<PAGE>

      (e) with the installment due November 30, 1998, interest on $54,817.60;

              and

      (f) with the installment due December 15, 1998, interest on $27,408.80.

      Principal  and any  interest  are  payable  in lawful  money of the United
States of  America  to the  Holder  at the  offices  of  Holder  in  immediately
available funds.

      If any of the following events shall occur and be continuing:

      (a) Debtor shall fail to pay any  installment  of principal or interest of
      this Note within ten (10) days of when due; or

      (b)  Debtor  shall  be in  default  of any of its  obligations  under  the
      Purchase Agreement dated August 4, 1997 among Holder,  Debtor and Triomphe
      Fourrures  Incorporated  and any such failure shall remain  unremedied for
      ten (10) days after written notice thereof shall have
      been given to Debtor by Holder; or

      (c)  Debtor  shall  admit  in  writing  its  inability  to pay  its  debts
      generally;  or  shall  make  a  general  assignment  for  the  benefit  of
      creditors;  or any  proceeding  shall be instituted  by or against  Debtor
      seeking to adjudicate it a bankrupt or insolvent,  or seeking liquidation,
      winding up, reorganization,  arrangement,  adjustment, protection, relief,
      or  composition  of it or its debts under any law relating to  bankruptcy,
      insolvency or reorganization or relief of debtors, or seeking the entry of
      an order for relief or the  appointment of a receiver,  trustee,  or other
      similar  official for it or for any substantial  part of its property;  or
      Debtor shall take any corporate action to authorize any of the actions set
      forth above in this paragraph (c)

Then,  and in any such  event,  Holder  may,  by notice to Debtor,  declare  all
remaining  installments of principal and interest of this Note to be accelerated
and forthwith due and payable, whereupon this Note shall become and be forthwith
due and payable,  without presentment,  demand, protest or further notice of any
kink, all of which are hereby expressly waiver by Debtor.

      This  Note may be  prepaid  by  Debtor  at any  time or from  time to time
without penalty or premium.

      This Note may not be changed,  modified or terminated  orally, but only by
an agreement in writing, signed by the Debtor and Holder.

      This Note shall be governed by and construed in  accordance  with the laws
of the State of New York and shall be binding upon the successors and assigns of
the Debtor and inure to the benefit of the Holder, its successors and assigns.
<PAGE>
      Debtor hereby  irrevocably  consents and submits to the subject matter and
personal  jurisdiction  of the Supreme  Court of the State of New and the United
States  District Court for the Southern  District of New York in connection with
any action or  proceeding  arising out of or  relating to this Note,  and to the
extent permitted by law,  irrevocably  waives the defenses of improper venue and
inconvenient  forum to the  maintenance  of such  action or  proceeding.  Debtor
further  irrevocably  consents  that process out of said courts may be served by
certified  mail,  return receipt of said courts may be served by certified mail,
return receipt  requested,  and that such service shall be deemed effected three
(3) days after mailing. Nothing herein shall affect the right of Holder to serve
process in any other manner permitted by law or to commence legal proceedings in
any other jurisdiction.

      The execution  and delivery of this Note has been  authorized by the board
of  directors  of Debtor.  If any term or  provision  of this Note shall be held
invalid,  illegal  or  unenforceable,  the  validity  of  all  other  terms  and
provisions hereof shall in no way be affected hereby.

      If this Note is not paid when due and given to an attorney for collection,
or suit filed thereon,  Debtor agrees to pay Holder's reasonable  attorneys fees
and other costs of collection.

                                   EVANS, INC.



                                    By: _________________________
                                    Name:     Samuel B. Garber
                                    Title:          Vice President


State of Illinois
       :ss.:
County of Cook

      On this  _____ day of June,  1998,  before me  personally  came  Samuel B.
Garber,  to me known, who, being by me duly sworn, did depose and say that he is
the Vice  President  of Evans,  Inc.,  the  corporation  described  in and which
executed the foregoing instrument;  and that he signed his name thereto by order
of the board of directors of said corporation.


                                    ------------------------
                                          Notary Public




<PAGE>


                      AMENDED AND RESTATED PROMISSORY NOTE

$1,919,423.00                                                  June 3, 1998

      This  amended and  restated  promissory  note  amends and  restates in its
entirety that certain  promissory note dated August 4, 1997 from EVANS,  INC. to
TRIOMPHE FOURRURES INCORPORATED in the amount of $2,629,192.20.  The balance due
under the said promissory note is $1,919,423.00.

      FOR VALUE RECEIVED,  the undersigned,  EVANS, INC., a Delaware corporation
with  offices at 36 South State  Street,  Chicago,  Illinois  60603  ("Debtor"),
HEREBY  PROMISES TO PAY to the order of  Triomphe  Fourrures  Incorporated,  c/o
Revillon,  Incorporated  555  Madison  Avenue,  New  York,  New York  10022  the
principal sum of One Million Nine Hundred Nineteen  Thousand Four Hundred Twenty
Three and No Dollars ($1,919,423.00) as follows:

                  $67,696.60 on or before June 30, 1998  
                  $57,437.60 on or before August 31, 1998  
                  $57,437.60  on or before  September  30, 1998
                  $57,437.60  on or before  October 31, 1998  
                  $177,442.30  on or before  November 4, 1998  
                  $57,437.60 on or before November 30, 1998 
                  $57,437.60 on or before December 15, 1998  
                  $177,442.30 on or before February 4,1999 
                  $177,442.30 on or before May 4, 1999
                  $177,442.30  on or before  August 4,  1999  
                  $177,442.30  on or before November 4, 1999  
                  $677,326.90 on or before December 30, 1999

      Except as hereinafter  provided,  this Note shall not bear interest unless
the holder of this Note  ("Holder")  declares  this Note to be forthwith due and
payable pursuant to the terms of this Note, in which event interest shall be due
on the  unpaid  balance  of  principal  of this  Note  from the due dates at the
maximum rate allowed by law.

      Notwithstanding the foregoing,  the installments of principal due June 30,
1998, August 31, 1998,  September 30, 1998, October 31, 1998,  November 30, 1998
and December 15, 1998 shall be paid with interest at the rate of ten percent per
annum from May 5, 1998 on the following amounts:

      (a)    with the installment due June 30, 1998, interest on $177,442.30;

      (b)   with the  installment  due August 31, 1998,  interest on $109,745.70
            and interest on $177,442.30 beginning August 4, 1998;

      (c)   with  the   installment   due  September   30,  1998,   interest  on
            $229,750.40;

      (d)   with the installment due October 31, 1998, interest on $172,312.80;

<PAGE>

      (e)   with the installment due November 30, 1998, interest on $114,875.20;

      (f)   with the installment due December 15, 1998, interest on $57,437.60.

      Principal  and any  interest  are  payable  in lawful  money of the United
States of  America  to the  Holder  at the  offices  of  Holder  in  immediately
available funds.

      If any of the following events shall occur and be continuing;

            (a)  Debtor  shall  fail  to pay any  installment  of  principal  or
      interest of this Note within ten (10) days of when due; or

            (b) Debtor shall be in default of any of its  obligations  under the
      Purchase Agreement dated August 4, 1997 among Holder, Debtor and Revillon,
      Incorporated  and any such failure  shall remain  unremedied  for ten (10)
      days  after  written  notice  thereof  shall  have been given to Debtor by
      Holder; or

            (c) Debtor  shall  admit in writing its  inability  to pay its debts
      generally;  or  shall  make  a  general  assignment  for  the  benefit  of
      creditors;  or any  proceeding  shall be instituted  by or against  Debtor
      seeking to adjudicate it a bankrupt or insolvent,  or seeking liquidation,
      winding up, reorganization,  arrangement,  adjustment, protection, relief,
      or  composition  of it or its debts under any law relating to  bankruptcy,
      insolvency or reorganization or relief of debtors, or seeking the entry of
      an order for relief or the  appointment of a receiver,  trustee,  or other
      similar  official for it or for any substantial  part of its property;  or
      Debtor shall take any corporate action to authorize any of the actions set
      forth above in this paragraph (c),

then,  any in any such  event,  Holder  may,  by notice to Debtor,  declare  all
remaining  installments of principal and interest of this Note to be accelerated
and forthwith due and payable, whereupon this Note shall become and be forthwith
due and payable,  without presentment,  demand, protest or further notice of any
kind, all of which are hereby expressly waiver by Debtor.

      This  Note may be  prepaid  by  Debtor  at any  time or from  time to time
without penalty or premium.

      This Note may not be changed,  modified or terminated  orally, but only by
an agreement in writing, signed by the Debtor and Holder.

      This Note shall be governed by and construed in  accordance  with the laws
of the State of New York and shall be binding upon the successors and assigns of
the Debtor and inure to the benefit of the Holder, its successors and assigns.
<PAGE>

      Debtor hereby  irrevocably  consents and submits to the subject matter and
personal  jurisdiction  of the supreme  Court of the State of New and the United
States  District Court for the Southern  District of New York in connection with
any action or  proceeding  arising out of or  relating to this Note,  and to the
extent permitted by law,  irrevocably  waives the defenses of improper venue and
inconvenient  forum to the  maintenance  of such  action or  proceeding.  Debtor
further  irrevocably  consents  that process out of said courts may be served by
certified mail, return receipt requested,  and that such service shall be deemed
effected three (3) days after mailing.  Nothing herein shall affect the right of
Holder to service  process in any other  manner  permitted by law or to commence
legal proceedings in any other jurisdiction.

      The execution  and delivery of this Note has been  authorized by the board
of  directors  of Debtor.  If any term or  provision  of this Note shall be held
invalid,  illegal  or  unenforceable,  the  validity  of  all  other  terms  and
provisions hereof shall in no way be affected thereby.

      If this Note is not paid when due and given to an attorney for collection,
or suit filed thereon,  Debtor agrees to pay Holder's reasonable  attorneys fees
and other costs of collection.

                                   EVANS, INC.



                                    By: ____________________
                                    Name: Samuel B. Garber
                                    Title:   Vice President


State of Illinois
       : s :
County of Cook

      On this  ______ day of June,  1998,  before me  personally  came Samuel B.
Garber,  to me known, who, being by me duly sworn, did depose and say that he is
the Vice  President  of Evans,  Inc.,  the  corporation  described  in and which
executed the foregoing instrument;  and that he signed his name thereto by order
of the board of directors of said corporation.

                        --------------------------
                                  Notary Public